Microsoft Corporation (NASDAQ:MSFT) is making inroads in a key market, and at the rate its going, longtime stalwarts including Hewlett-Packard Company (NYSE:HPQ) and International Business Machines Corp. (NYSE:IBM) better stand up and take notice.
IT operations management: What is it?
Computer Weekly Developer Network describes IT operations management, or ITOM, as, “the day-to-day tasks related to the management of technology infrastructure components,” and the “individual applications, services, storage, networking and connectivity elements of a total IT stack.” And the ITOM market is big, in both the cloud and traditional IT environments, and getting bigger. According to research from Gartner Inc (NYSE:IT), the ITOM software market generated $18 billion last year, up 4.8% from 2011.
Though Microsoft Corporation (NASDAQ:MSFT) ranks fourth in the ITOM marketplace, things start to get interesting for investors when we analyze the last couple of years. The top five ITOM vendors account for 55% of the entire market, and of those, Microsoft has easily outgrown the others on a percentage basis: Jumping 11.2% in annual revenue from 2010 to 2011, and up 16.1% from 2011 to 2012.
Of the top five, only Hewlett-Packard Company (NYSE:HPQ) and CA, Inc. (NASDAQ:CA) — a $12.35 billion market cap ITOM solutions provider — experienced a decrease in revenue compared to 2011. HP experienced the largest decline of the big boys, falling 4.3% year over year. CA was essentially flat, dropping 0.6% to $2.21 billion in revenue compared to $2.26 billion in 2011.
The big picture
Investors aren’t discounting the strides Microsoft Corporation (NASDAQ:MSFT) is making in mobile computing and cloud-related products, including Office 365, as evidenced by its share price pop of over 27% so far this year. IDC’s recent data showing Windows Phone taking over the No. 3 smartphone OS spot in Q1 of this year is also a great topic around the proverbial water cooler.
Now toss in the success Microsoft Corporation (NASDAQ:MSFT) is enjoying in ancillary businesses like ITOM, particularly compared with competitors like Hewlett-Packard Company (NYSE:HPQ) and CA, Inc. (NASDAQ:CA), and the mid- to long-term growth prospects really get interesting.
International Business Machines Corp. (NYSE:IBM) is cheaper than Microsoft on a trailing P/E basis, largely due its stock price decline after missing analyst estimates in the recently announced Q1, combined with Microsoft’s stellar run since its own earnings release on April 18. But what separates Microsoft Corporation (NASDAQ:MSFT) from IBM and others, is its success in growing multiple business lines simultaneously, including ITOM revenue, even as its competitors remain stagnant or decline. The market loves talking about Windows 8 and mobile computing, and that’s fine, but Microsoft is proving it has a lot more to offer investors.
The article There’s More to Microsoft Than Windows 8 originally appeared on Fool.com.
Fool contributor Tim Brugger has no position in any stocks mentioned. The Motley Fool owns shares of BMC Software, International Business (NYSE:IBM) Machines, and Microsoft.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
