Application Server Market Size, Share & Trends Analysis Report By Type (Java, Microsoft Windows), By Deployment (Hosted, On-premise), By End Use (BFSI, Manufacturing, IT & Telecom), And Segment Forecasts, 2021 - 2028

Report Overview

The global application server market size was valued at USD 15.84 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 13.2% from 2021 to 2028. The COVID-19 pandemic has moderately triggered market growth, owing to the fall in end-users spending on new servers and changes in demand from various groups of IT buyers globally. Application servers leverage the latest software delivery models, evolving methodologies for developing mobile applications, and open-source software to ensure an optimal experience while running various apps on smartphones and tablets and accessing various cloud-based applications. The growing preference for using mobile apps in line with the proliferation of smartphones and the continued rollout of high-speed internet networks are expected to drive the growth.

Rapid improvements in mobile device technologies and wireless networks have opened immense opportunities for expanding the scope of application servers to unconventional areas, such as information dissemination and digitalization of government services. Moreover, the growing preference for e-commerce and mobile commerce also bodes well for the growth of the market over the forecast period.

Application servers provide middleware services for security and maintenance and tools for creating web applications while enabling access to data over the network. Organizations are increasingly becoming reliant on IT systems, as IT systems ensure efficient and effective management of backend processes and databases. The growing reliance of businesses on IT infrastructure is anticipated to drive the growth of the market over the forecast period. The increase in online channels and the growing need for applications that can potentially support sales and help in accessing sales records remotely are some of the other factors that are expected to contribute to the growth of the market.

Application servers allow software developers to build and host new web applications supported by the server environment. Application servers also provide the services necessary to improve the diagnostic capabilities and security of web applications. As a result, web developers can track, identify, and troubleshoot issues with their web applications efficiently.

Application servers provide access to business records remotely in real-time and help in streamlining business processes. Moreover, the application server provides flexibility and ease of use to avoid the expenses and complexities involved in developing e-commerce applications. Intensifying competition in the e-commerce industry and the growing need for applications that can potentially support sales by accessing records remotely are expected to drive the growth of the market.

Type Insights

The Java segment accounted for the largest share of around 50% in 2020 in line with the continued adoption of application servers by the incumbents of the e-commerce industry. Java is also expected to emerge as the fastest-growing segment over the forecast period. Java application servers can act as virtual machines running applications and synchronously handling database connections at one end and web clients on the other end.

Microsoft Windows application servers include COM+ for application-type communication, .NET Framework to deliver application support, ASP.NET to offer server-side scripting, Internet Information Services (IIS) to provide web server support, and Windows Communication Foundation (WCF) for application communication, and message queuing for multithreaded processing. The growing adoption of software platforms by small-scale and medium-scale businesses (SMBs) is projected to drive the growth of the Microsoft Windows segment over the forecast period.

Deployment Insights

Based on deployment, the application server market has been further segmented into hosted and on-premise. The hosted segment accounted for the largest market share of around 70% in 2020 and is expected to register the highest CAGR of 13.5% over the forecast period. Advancements in information sharing technologies and the increasing use of mobile devices are anticipated to encourage the development of sophisticated applications for effective data management and service delivery. The hosted deployment also increases accessibility while reducing maintenance, providing rapid integration, and lowering operational workforce requirements.

However, several companies are preferring on-premise deployment owing to the feasible opportunities and considerable customization offered by the on-premise deployment of software. On-premise installation of solutions offers high-end data security while allowing companies to comply with various government regulations. The on-premise deployment also allows large organizations to control access to confidential data. The ability of on-premise deployment to allow organizations to tailor the solution to the needs of their business processes particularly bodes well for the growth of the on-premise segment.

End-use Insights

Based on end-use, the market has been further segmented into BFSI, IT and telecom, healthcare, government, retail, manufacturing, and others. The BFSI segment accounted for a market share of around 20% of the global market in 2020. Incumbents of the BFSI industry use application servers to develop banking applications that can potentially offer multiple functionalities to support user sessions concurrently. On the other hand, incumbents of the healthcare industry vertical are aggressively using mobile applications to offer medical assistance to patients in remote locations in real-time, thereby driving the growth of the healthcare segment. The other segment covers various end-use segments, such as defense, education, and media and entertainment. The growing preference and increasing adoption of application servers by organizations operating in various other industries and industry verticals are anticipated to drive the growth of the other segment.

The growing adoption of connected devices, Internet of Things (IoT) devices, and connected sensors by incumbents of various industries and industry verticals is expected to play a decisive role in driving the growth of the market over the forecast period. Real-time data analytics in businesses, personal communication apps, and work collaboration apps is among the key applications that are also expected to contribute to the growth.

Regional Insights

North America dominated the market for application servers in 2020 and accounted for a revenue share of over 40%. North America is known for the early adoption of the latest technologies and the high penetration rate of mobile communication devices. The U.S. and Canada are considered highly mature markets in terms of early adoption of the latest and emerging technologies. Hence, the adoption rate of application servers is high among businesses based in North America. North America is also home to several leading market players.

Asia Pacific is expected to emerge as the fastest-growing regional market. Asia Pacific is known for the multifold growth of the e-commerce and manufacturing industries, the proliferation of smartphones, and the rollout of high-speed wireless internet networks. The growing number of software and IT service providers, the increasing number of service-based startups, and the aggressive adoption of the latest technologies, particularly in India and China, are some of the other key factors that are expected to contribute to the growth of the regional market.

Key Companies & Market Share Insights

The key players operating in the market include Microsoft Corporation; International Business Machines Corp.; Oracle Corporation; Red Hat, Inc.; and TIBCO Software Inc. Industry players are investing aggressively in R&D activities and improving their internal processes as part of the efforts to increase their market share. They are also actively engaging in new product development to improve and expand their existing product and service portfolios. All these market participants are particularly investing in R&D activities to drive organic growth and cement their position in the market. They are also putting a strong emphasis on mergers and acquisitions and strategic partnerships to develop technologically advanced products and gain a competitive edge in the market. Some of the prominent players operating in the global application server market are:

• Microsoft Corporation

• International Business Machines Corp.

• Oracle Corporation

• Red Hat, Inc.

• TIBCO Software Inc.

• The Apache Software Foundation

• FUJITSU

• VMware, Inc.

• NEC Corporation

• SAP SE

Application Server Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2028. For this study, Grand View Research has segmented the global application server market report based on type, deployment, end-use, and region:

• Type Outlook (Revenue, USD Billion, 2016 - 2028)

  • Java

    • J Boss

    • Jetty

    • Tomcat

    • Others

  • Microsoft Windows

  • Others

• Deployment Outlook (Revenue, USD Billion, 2016 - 2028)

  • Hosted

  • On-premise

• End-use Outlook (Revenue, USD Billion, 2016 - 2028)

  • BFSI

  • Government

  • Healthcare

  • IT & Telecom

  • Manufacturing

  • Retail

  • Others

• Regional Outlook (Revenue, USD Billion, 2016 - 2028)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

  • Middle East & Africa (MEA)