Electronic software sales growing steadily

With the growing popularity of on-line shopping, the market for purchasing software on the Internet is getting a big piece of the action, according to a recent International Data Corp. (IDC) study.

The findings of IDC’s report indicate the worldwide electronic software commerce (ESC) market will achieve an estimated US$3.5 billion in revenues this year, and will jump to US$32.9 billion by 2003.

Steve McHale, research director of the software channel and alliance strategies program of IDC Canada Ltd. in Toronto, said the study’s figures were attained from several sources.

“We had a number of vantage points to come up with the different numbers,” he explained, “and those included what we know about World Wide Web usage, commerce on the Web, the leading products that are purchased on the Web, what retailers are reporting and what the vendors are reporting.”

The study found the ESC market is experiencing a surge due to increases in the number of Internet users and businesses now on-line, plus improvements in customer tracking and product management techniques.

Nadine Robinson, manager of e-commerce sales at Corel Corp. in Ottawa, said the growth can be attributed to increased PC access in general.

“Computers are becoming more readily available with more people having computers and access to the Internet,” she explained. “Internet surfing is increasing and so people are becoming more comfortable shopping and receiving software that way, so it just fuels the industry. I think it’s almost trendy now, to buy on-line.”

She said the electronic software distribution market is something Corel is actively pursuing.

“Electronic software (distribution) is an alternate channel,” she said, “and if consumers want to use it, then we want to make sure we offer them the chance to buy.”

Bhavisha Morphet, manager of volume licensing for Microsoft Canada Corp. in Mississauga, Ont., said the Internet and e-commerce benefit everyone.

“We’re really trying to mesh the two,” she explained.

“We’re using the Internet and e-commerce as a way to help our channel partners capitalize on additional opportunities, as well as taking the opportunity to use the Internet to help educate our customers so they can make more informed decisions, as it relates to technology in their business.”

However, results from the study showed business users aren’t as likely to “jump on the vendor bandwagon driving toward on-line licence acquisition,” and there are some matters that will have to be addressed in this area, according to McHale.

“They (business users) have some concerns that will need to be covered before this becomes a really viable proposition,” he said. “Number one, they want less expensive software. If it’s going to be delivered electronically, they want it to be done less expensively as well. They also worry about how tightly their usage is going to be metered.”

On-line software purchasers would like to see vendors pass down savings from Internet sales to the user by lowering the cost of products, according to the study results. They also want better tools to manage their licences.

According to Microsoft’s Morphet, her company has already begun to deal with those issues.

“The Microsoft Licensing Online Web site directly addresses that concern,” Morphet said.

The site (www.microsoft.com/mlo/), which was set up in late July, was created for small to medium-sized Canadian businesses and offers volume discounts on licences for two years, according to Morphet.

At Corel, the company has been preparing both internally and externally for the prospective growth in the ESC market.

“Certainly we recognize that e-commerce is a prime dynamic of the 2000s,” said Mark Emond, Corel’s manager of global volume licensing programs. “Our strategy points to that in terms of the partnerships, relationships, and sales and marketing that are ongoing.”

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