Web Services Market to Reach $21 Billion by 2007

Web services are the consensus choice as the technology world’s next frontier, but how long it will take to reach and bring order to that uncharted territory is more debatable.

The Web services industry is still immature, but that will change radically in the coming years going to Framingham, Mass.-based research firm IDC. In fact, IDC projects that over the next 10 years $184 billion dollars will spent on Web services projects.

In U.S. Web Services Market Analysis, 2002 IDC predicts that Web services will become the dominant distributed computing architecture in the next 10 years. Web services will drive software, services and hardware sales of $21 billion in the U.S. by 2007 and will reach $27 billion in 2010.

Like the technology itself, predicting revenue growth for Web services is also complicated. “Our forecast shows the Web services opportunity distributed unevenly among technology providers and peaking at different times for each technology segment,” Anthony Picardi, senior vice president of Global Software at IDC, said. “The software opportunity will peak first in 2007 and then decline as customers build out their platforms.” IDC predicts that hardware will follow in 2009 and then professional services in 2011.

“It is important for vendors in each of these segments to understand the current market trends and adoption rates in order to take the appropriate actions that will ensure future success,” Picardi said.

While Web services aren’t expected to peak for several years, there are plenty of projects underway that are testing the waters. IDC reports that at the end of 2002, 5 percent of enterprises in the United States completed Web services projects and and 80 percent will have projects under way by 2008.

An earlier IDC study on Web services reported that four out of five enterprises intend to undertake Web services projects over the next three years and nearly 25 percent have already completed an internal solution using Web services.

Large enterprises in the manufacturing and services industries will account for the fastest growth, IDC reports, but by 2007 the market will be dominated by small enterprises.

New challenges will continue to emerge, IDC said, as Web services technology works its way into the enterprise. The IT industry must continue to collectively address challenges, which will require cooperation among vendors.

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