Software - Europe

Europe

Revenue in the Software market is projected to reach US$157.30bn in 2024.
Enterprise Software dominates the market with a projected market volume of US$65.38bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2028) of 5.84%, resulting in a market volume of US$197.40bn by 2028.
In global comparison, most revenue will be generated in the United States (US$353.50bn in 2024).

Key regions: United States, Canada, Germany, China, Japan

Definition:

In general, software is defined as a set of instructions written as programming code to execute specific tasks on a computing device. The Software market covers a wide range of software products and solutions that are publicly sold by various companies. Most software solutions in this market are designed for professional use, but some can also be suitable for personal use. They can also range from basic productivity tools such as word processors and spreadsheets to complex software solutions such as project management tools, graphic design software, and enterprise resource planning software.

Products in the Software market can be obtained in two ways: as on-premises software that is sold via a transactional license or a subscription and as cloud-based software (software as a service/ SaaS) that is most frequently sold as a subscription.

Structure:

The market contains four markets that are based on the functionality of the software:

Productivity Software refers to application software that supports activities such as producing documents, spreadsheets, drawings, and presentations. This market includes Administrative Software, Collaboration Software, Office Software, Creative Software, and Construction and Design Software.
Enterprise Software refers to all software that supports essential large-scale business activities such as enterprise resource management, customer management, and supply chain activities. This market includes Enterprise Resource Planning Software, Customer Relationship Management Software, Business Intelligence Software, Supply Chain Management Software, Content Management Software, and Other Enterprise Software.
Application Development Software refers to software and tools that help the overall application development process.
System Infrastructure Software refers to software that provides the base framework for operating and managing organizational processes and services on hardware devices.

Additional Information:

The Software market comprises revenue and revenue change as the key performance indicators. Only revenues that are generated by primary vendors at the manufacturer price level either directly or through distribution channels (excluding value-added tax) are included, and revenues generated by resellers are excluded. Revenues are generated through both online and offline sales channels and include spending by consumers (B2C), enterprises (B2B) as well as governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed.

Key players in this market include Microsoft, Adobe, SAP, Oracle, and Salesforce.

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Analyst Opinion

The demand for software in Europe has been on the rise in recent years.

Customer preferences: Customers in Europe are increasingly looking for software that is user-friendly, efficient, and customizable. They want software that can be easily integrated with other systems and that can be accessed from anywhere. Additionally, there is a growing demand for software that is cloud-based, as this allows for greater flexibility and scalability.

Trends in the market: One trend that has emerged in the European software market is the increasing adoption of artificial intelligence (AI) and machine learning (ML) technologies. These technologies are being used to develop software that can automate tasks, improve efficiency, and enhance the customer experience. Another trend is the growing popularity of open-source software, which is becoming increasingly prevalent in Europe due to its flexibility and cost-effectiveness.

Local special circumstances: Several countries in Europe have their own unique software markets and special circumstances. For example, Germany has a strong focus on industrial software, while the UK has a thriving fintech industry. France has a growing startup ecosystem, while the Nordic countries are known for their innovation in the gaming industry.

Underlying macroeconomic factors: The growth of the software market in Europe can be attributed to several underlying macroeconomic factors. These include the increasing digitization of businesses, the rise of e-commerce, and the growing importance of data analytics. Additionally, the availability of venture capital and government support for startups has helped to fuel innovation in the software industry. Finally, the COVID-19 pandemic has accelerated the adoption of software in Europe, as businesses have had to adapt to remote work and digital operations.

Methodology

Data coverage:

The data encompasses B2B, B2G, and B2C enterprises, except for the Enterprise Software segment, in which consumer (B2C) spending is not considered. Figures are based on the allocation to the country where the money was spent at manufacturer price level (excluding VAT).

Modeling approach / Market size:

Market sizes are determined through a top-down approach with a bottom-up validation, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of the market-leading companies and reports from our primary research. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, level of digitization, GDP sector composition, and observed level of software piracy. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. The main drivers are the GDP and the level of digitization.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic is considered at a country-specific level.