There is still life in the consumer boxed software market, despite reports of the demise of the industry, according to market research company the NPD Group (http://www.npd.com). Some reports of that demise are due to the success of the Mac App Store and Apple's reduction of space in its retail stores for boxed software.
But don't weep for the box just yet. According to NPD's Retail Tracking Service, total consumer retail software (excluding games) increased 1% in 2010, to US$2.42 billion. The slight growth comes after two years of steep declines of 8% in 2008 and 10% in 2009.
Sales of business products led the way with 14% revenue growth on the strength of Microsoft's launch of Office 2010. Imaging and graphics was also a strong category with a 10% increase in revenue, as product launches from Adobe and Apple bolstered sales in the high-end professional segments of the market. And, so far, products like Microsoft Office and Photoshop aren't available in the Mac App Store.
"While industry pundits and commentators continue to forecast the death of retail software, it remains a strong and viable channel for companies wishing to get their products in front of the maximum number of customers," says Stephen Baker vice president of industry analysis at NPD. "While there is no doubt that 2010 saw a number of changes in in-store product distribution that will impact future sales, NPD's research shows that retail storefronts grew faster than ecommerce in 2010."
Microsoft was the leading publisher at retail in 2010 accounting for more than one-third of all retail sales dollars. Sales of Office 2010 drove revenue in the office productivity suites category to its highest level in more than four years. Intuit, Apple, Adobe, and Symantec were the other top publishers at retail. Together those five companies accounted for 78 percent of sales, up three percentage points from 2009.
Among the other major categories both finance and system utilities sales declined in sales. Finance software fell as tax software continued to move online. Security software revenue took a hit as major retailers, in partnership with security software publishers, continued to see value in offering basic security products for low, or no cost, with the longer-term expectation that those can turn into more fully featured suite sales and subscription revenue.
"Much of this year's revenue increase came as a result of sales of premium products such as Final Cut, Aperture, CS5, and Office," says Baker. However, the lower unit volume potential of these products, even as they increase in revenue importance, remains a major threat to the ongoing maintenance of sufficient shelf space in retail to keep the category viable."
-- Dennis Sellers