The local software market was worth US$6 billion in 2006 and should reach US$6.5 billion by 2008.  Overall it is growing at approximately eight percent.  Some sub-sectors such as security solutions and Voice Over Internet Protocol (VOIP), however, have enjoyed double digit growth for many years.

The Australian software market offers some of the best opportunities for U.S. technology developers. The Australian IT market is mature and sophisticated. End-users, whether in corporate, public, or retail sectors, were early adopters of cutting-edge, technology products. U.S. companies and their products are widely-accepted in the local market, making it easier for new-to-market companies to enter the market.  In 2005, U.S. software accounted for 42 percent of Australia’s software imports.

Third-country and cutting-edge, software technologies are also well-established in the local market. Companies such as SAP, Fujitsu, and Alcatel have a strong client base in the local market. Israel, Japan, Germany, and the United Kingdom are the most common source of imports of third-country software into Australia.

Local market partners are very experienced in working with U.S. high-tech companies and have an excellent understanding of how best to market and generate sales leads in Australia. This and the commonality of English as the main spoken language, mean that Australia has become one of the first, non-U.S. destinations that U.S. software companies should consider.  It is easier to find a local partner for cutting-edge applications than a mature, me-too product.  Since it can be expensive to market a new product, local partners will want to ensure that they can maximize their return on investment, which a cutting-edge technology will ensure. The challenge for U.S. software developers when identifying a local partner is to fully understand the local market opportunities. Australia is a relatively-small market with a population of 20 million.  Many potential partners will be small companies with four to eight, full-time employees.  Australia can provide excellent opportunities for small-to-medium (SME), U.S. software companies.

Unless the software has application to a specific, vertical market, the best opportunities lie in selling solutions to Australia’s largest technology consumers. These include the government, finance/insurance, telecommunications, and retail markets. Solutions these markets demand include: voice messaging solutions (including VoIP applications); security solutions for networks/email environments/anti spam and “phishing;” workflow/document and asset management; corporate governance compliance solutions; and data cleansing and quality tools.

Software as a Service (SaaS) as a delivery mechanism is gaining traction with local end-users, SME companies.

• The provision of goods and services to Federal and State Government agencies offers excellent opportunities for U.S. IT companies. Some of the multi-million dollar contracts on offer are for the provision of a suite of very complex services calling for an experienced prime contractor. It is possible, however, for a smaller local integrator to win part of the contract if it has participated in the tender bid, due to the nature of the specific technology and product skills.  Thus, if the U.S. company partners with a well-connected local firm, the opportunities present in this market segment are very promising.

• Good opportunities exist in the private sector in the finance/insurance, telecommunications, retail, and manufacturing markets.

• Australia has only just begun to see local ISPs offering viable, robust VoIP solutions to consumers. With over 4.3 million subscribers and the number expected to grow strongly again in the next year, U.S. developers of VoIP solutions should find substantial opportunities in the local market.

• Security solutions are also in demand. Given the ever-changing nature of security threats to networks, email systems, and websites, governments and companies are prepared to devote a good proportion of their IT budgets to ensuring that their assets are secure. This is particularly true for the government agencies like defense and Centrelink (welfare agency), as well as all private financial institutions.

• Software as a Service solution.