IDC: Microsoft 'ecosystem' totals $425B in annual revenue

Study commissioned by vendor says its partners employ 42% of IT industry workers

Microsoft Corp. openly credits its technology partners, including resellers, systems integrators and independent software vendors, for much of its financial success.

Now a study, conducted for Microsoft by market research firm IDC, claims to quantify how much those partners -- as well as the governments where the employees of those companies work -- benefit from the software vendor.

According to IDC, the so-called Microsoft ecosystem, including about more than 640,000 hardware, software, services and distribution companies, employs 42% of all IT industry workers worldwide.

Those employees will pay a total of more than $500 billion in taxes this year, according to the study, which was released at a press conference in Budapest on Thursday -- the same day that Microsoft announced several rounds of planned investments in Hungary and Romania.

Moreover, Microsoft's partners will garner a total of about $425 billion in revenues this year, while investing $100 billion in local economies via spending on research, development, marketing, sales and support, said Framingham, Mass.-based IDC. The study also found that for every dollar Microsoft makes this year, its partners will earn a total of $7.79.

Although the research was sponsored by Microsoft, the figures may provide more ammunition for the software vendor as it seeks to expand its business in Third World countries where its software is often already widely used, but on a pirated basis.

As Microsoft pressures the governments in those countries to crack down on piracy, some are starting to consider the alternative: encouraging the use of open-source software or adopting it outright.

IDC's findings were based on a study of 82 countries and regions. The research firm said the study shows that overall IT spending will total $1.24 trillion worldwide this year and will grow at an annual rate of 6.1% through 2011 -- double the expected global growth rate of gross domestic product.

To calculate the amount of spending within the Microsoft ecosystem, IDC said that it "started with IT spending by category in each country and region and assigned a percent of the category that either ran on a Microsoft operating system or that was involved in servicing Microsoft software." Those percentages were taken from previous research done by the firm, it added.

IDC said it then estimated Microsoft's revenue for each country or region and "deducted that from the total Microsoft-enabled revenue. What was left is the Microsoft-enabled revenue from companies other than Microsoft."

Copyright © 2007 IDG Communications, Inc.

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