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Software Slump Is Deal Time

The financial slowdown in the software market makes for a nice opportunity for data center managers to strike deals on software.

The IT industrys long-awaited economic recovery appears to be slowing in the software sector. Vendors feeling the pinch include BMC Software Inc. (NYSE: BMC), Siebel Systems Inc. (Nasdaq: SEBL), Veritas Software Corp. (Nasdaq: VRTS), PeopleSoft Inc. (Nasdaq: PSFT), and Computer Associates International Inc. (CA) (NYSE: CA). (See CA Warning Points to Product Holes.)

Even IBM Corp. (NYSE: IBM), which reported strong second-quarter earnings last night, admitted that its software business is essentially flat, compared to the second quarter of 2003 (see IBM Unveils Q2 Results).

Analyst firm Gartner Inc. warns that there will be slow growth in the software space until around 2006 and blames falling license sales for the financial shortfall many vendors are experiencing. With many users signed up for two- or three-year licensing deals, the vendors have little choice other than to sweat it out.

But, for those data center managers that need new software or are planning future requirements, now is a great time to buy. Gartner analyst Joanne Correia believes that there are plenty of good deals to be had and urges prospective users to make vendors demonstrate the real business value of their software.

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