Boxed Software Revenues Slipping

The 7% dip in 2009 was an improvement over the double-digit drop in 2008, and came on sales of Microsoft Windows 7 and Apple Snow Leopard.
Despite a 35% increase in operating system sales, boxed software revenue at U.S. retailers fell 7% in 2009, a research firm said Friday.

But despite the decline, the $2.4 billion taken in at stores represented an improvement over the 10% drop in sales in 2008, The NPD Group said. Year-over-year unit volume in 2009 fell 6% and average selling price declined 2%.

Operating systems was the only category that posted a revenue and unit increase over 2008, 35% and 162%, respectively. Driving the increases were the release of Microsoft Windows 7 and Apple Snow Leopard in the back half of the year. Both OSes set record sales and growth figures for their initial launch periods and continued to sell strongly even after the intial sales burst, NPD said.

Besides OSes, business software was the only other non-game, boxed software to post a unit gain. The category grew 6%, due mostly to a 15% drop in average selling prices.

For example, the ASP for Microsoft Office Home and Student editions, which sold well during the back-to-school and holiday shopping periods, fell from $118 in the prior year to $106 in 2009, NPD said. Apple's iWork 2009 saw ASPs drop 15% year-over-year on the single-user version.

Because of falling prices, revenue from business software overall fell 10%, as the ASP dropped 15% to $100. All other categories, with the exception of OSes, also saw drops in revenue, including education, finance, imaging/graphics, personal productivity and system utilities.

"[The year] 2009 was a mixed bag for the packaged consumer software market," NPD analyst Stephen Baker said in a statement.

For 2010, NPD forecasts similar sales results, as the lack of any OS launches will likely be offset by the release of Office 2010.