Mercury Declared Uncontested Leader in Distributed ASQ Market

July 2005

Captures 58.8 Percent Market Share – Nearly Tripling Market Share of Any Other Vendor

Mountain View – July 26, 2005 – Today, Mercury Interactive Corporation (NASDAQ: MERQ), the global leader in business technology optimization (BTO) software, announced that it has been declared the uncontested leader in the distributed automated software quality (ASQ) market by IDC. According to IDC, Mercury continued as the market revenue leader. The report states that Mercury has increased its market share over 2003 to 58.8 percent in 2004, nearly three times that of the nearest competitor. These findings are based on worldwide revenues for the year 2004 and are reported in the new IDC market study “Worldwide Distributed Automated Software Quality Tools 2005-2009 Forecast and 2004 Vendor Shares.”

“Mercury remains the dominant force in the ASQ market space with a growth rate that translated to increased market revenue share in 2004,” said Stephen Hendrick, group vice president in IDC's application development and deployment service and author of the report. “Mercury continues to demonstrate an innate ability to determine what the ASQ market will require next and to be a leader in providing software technology to meet those evolving needs.”

The report notes that as companies continue to face relentless business pressures for quality, productivity, and faster time to market, Mercury has responded by offering BTO and IT Governance. Mercury's expanded influence in BTO appears to be paying off and contributing to increased activity across all Mercury products, according to the report. The report states that IT Governance also remains a focus within Mercury and is a natural complement to the myriad of ASQ products and functions offered by Mercury. Though Mercury has placed much emphasis and effort in these new areas, they are built upon the historical core competencies of load testing and performance monitoring, according to the report.

Mercury's continued strong performance in revenue and market share indicate that Mercury is well positioned to address BTO and IT Governance needs while also maintaining their core product revenues,” continued Hendrick. “IDC believes Mercury is well situated to continue their strong record of growth and market dominance in automated software quality.”

The distributed segment of the automated software quality (ASQ) tools, which grew to $780 million in 2004, or an 18.5 percent growth over 2003, was once again the growth leader across application life-cycle markets, according to the report. IDC states that although the ASQ market is continuing to mature and consolidate, the market for automated software quality is still far from reaching its ultimate potential. IDC states that they are optimistic that there is still considerable growth that will occur in this market and cites the following reasons:

• The criticality of software to the business (and the visibility and impact of software failures), the increasing complexity of software applications and systems, and the relentless business pressures for quality, productivity, and faster time-to-market have all been positive drivers in the ASQ market in the past and will continue to be in the foreseeable future;
• The continual shift towards a services-oriented architecture will drive demand for new ASQ capabilities to assess and certify Web services and components;
• Closed-loop testing will help bridge the gap between development and production, making data from monitoring tools available to pre-production test and simulation.;
• Deeper integration in the future of monitoring and tuning tools with diagnostics and application development tools so that problems can be identified and resolved much more quickly and in real-time
• Predictive analysis — detecting and correcting problems before they become critical — will become a key technology for proactive quality assurance.

The report also states that all of these characteristics will feed the higher disciplines of IT project and portfolio management and IT governance that seek to more closely align IT development with business goals and objectives.

“We are pleased to be acknowledged by IDC for our market leadership,” said Christopher Lochhead, chief marketing officer at Mercury. “CIO accountability for the quality and performance of business critical applications has never been higher. Mercury’s strong BTO offerings, market share momentum, and relentless focus on customers, position us to capitalize on this large and under-penetrated market.”

For more information on IDC’s Worldwide Distributed Automated Software Quality Tools 2005-2009 Forecast and 2004 Vendor Shares report, please visit www.idc.com, report number 33771.

About Mercury

Mercury Interactive Corporation (NASDAQ: MERQ), the global leader in business technology optimization (BTO) software, is committed to helping customers optimize the business value of information technology. Founded in 1989, Mercury conducts business worldwide and is one of the fastest growing enterprise software companies today. Mercury provides software and services for IT Governance, Application Delivery, and Application Management. Customers worldwide rely on Mercury offerings to govern the priorities, processes and people of IT and test and manage the quality and performance of business-critical applications. Mercury BTO offerings are complemented by technologies and services from global business partners. For more information, please visit www.mercury.com.

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