Online Software Sales Grow with Internet

The worldwide market for online software sales will be worth $3.5 billion in 1999, and is expected to reach $32.9 billion by 2003 as more business and consumer end users get accustomed to shopping on the Internet, according to a report by International Data Corp. (IDC).

Online retailers are taking a majority share of this market and will continue to command the end-user experience as they improve their customer tracking and product management capabilities, according to IDC’s bulletin “The Internet Impact on Worldwide Software Sales.” More sophisticated online retail operations and the continued migration of computer users to the Internet will drive the market for electronic software commerce.

According to IDC, software vendors are increasingly recognizing the need to provide end users with more options for acquiring software, including direct Internet sales and the electronic delivery of both software and licenses.

The end users will continue to post stringent requirements, however, for participation in online software license acquisition, which forms the core of the opportunity for vendors seeking to increase revenue, reduce costs, improve customer communications, IDC found.

“Electronic software commerce is clearly a major opportunity for vendors,” said Steve McHale, research director of IDC’s Software Channel and Alliance Strategies program. “Both corporate and consumer end users are increasingly becoming game to shop the Internet, and software is the product of choice when they do.”

Business users, however, are less likely to jump on the vendor bandwagon driving toward online license acquisition.

“Volume licensing programs clearly have a long way to go in terms of developing a real electronic value proposition for end users,” McHale said. “Essentially, they’re looking to vendors to make licenses cheaper to acquire and easier to manage, and we haven’t seen a clear response to those consumers from the vendor community, which tends to see only unfettered opportunity on the Internet.”