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.
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.
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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Productivity software, such as Microsoft, Adobe, and Zoom
Enterprise software, such as Oracle, SAP, and ServiceNow
Application development software, such as Amazon Web Services (AWS), Squarespace, and Visual Studio
System Infrastructure Software, such as Cisco, Gen Digital, and McAfee
PC and gaming software, such as NVIDIA Corporation, Improbable, and Plug In Digital
Social networking, such as Facebook, Yammer, Twitter, and Zimbra
Free of charge software, such as Airtable, Anaplan, and BlackLine
Custom made applications, such as Sphinx Solutions, CHI Software, and Intellectsoft
The software market has been experiencing significant growth worldwide due to the increasing demand for digital transformation across various industries.
Customer preferences: Customers are increasingly looking for software solutions that can help them streamline their business processes, reduce costs, and improve efficiency. Cloud-based software solutions have become increasingly popular due to their flexibility, scalability, and cost-effectiveness. Additionally, customers are also looking for software solutions that can help them comply with data privacy regulations and improve cybersecurity.
Trends in the market: In the United States, the software market is dominated by large players such as Microsoft, Oracle, and IBM. These companies offer a wide range of software solutions to customers across various industries. However, there has been a trend towards the adoption of open-source software solutions, which offer greater flexibility and cost-effectiveness. Additionally, there has been an increasing demand for software solutions that can help companies automate their business processes and improve customer experience.In Europe, the software market is highly fragmented, with a large number of small and medium-sized software companies offering specialized solutions to customers in different industries. There has been a trend towards the adoption of cloud-based software solutions, which offer greater flexibility and scalability. Additionally, there has been an increasing demand for software solutions that can help companies comply with the General Data Protection Regulation (GDPR) and improve cybersecurity.In Asia, the software market is dominated by companies such as Tencent, Alibaba, and Baidu, which offer a wide range of software solutions to customers across various industries. There has been a trend towards the adoption of mobile-first software solutions, as more customers in the region access the internet via mobile devices. Additionally, there has been an increasing demand for software solutions that can help companies improve supply chain management and logistics.
Local special circumstances: In Latin America, the software market is still in its early stages of development. However, there has been a trend towards the adoption of software solutions that can help companies improve customer experience and comply with data privacy regulations. Additionally, there has been an increasing demand for software solutions that can help companies improve financial management and reduce costs.In Africa, the software market is also in its early stages of development. However, there has been a trend towards the adoption of software solutions that can help companies improve healthcare delivery, education, and agriculture. Additionally, there has been an increasing demand for software solutions that can help companies improve financial inclusion and reduce poverty.
Underlying macroeconomic factors: The growth of the software market worldwide is being driven by several macroeconomic factors, including the increasing adoption of digital technologies, the growing demand for cloud-based solutions, and the need for companies to improve efficiency and reduce costs. Additionally, the increasing focus on data privacy and cybersecurity is driving the adoption of software solutions that can help companies comply with regulations and protect their data. The COVID-19 pandemic has also accelerated the adoption of digital technologies, as more companies shift towards remote work and online business models. As a result, the software market is expected to continue growing in the coming years, driven by the increasing demand for digital transformation across various industries.
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.
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.
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.