PC software has oftentimes been linked to the canary in the coal mine. As purchasing and downloading software virtually has become so pervasive some say PC software is the precursor to the death of the store, just like the canary warned the miners of old. In that spirit I would like to point out that NPD just released a new report from our software group about online software purchasing. One of the issues we highlighted in the press release deserves more insight as it directly addresses this. According to the report, 63% of PC software sales online were downloads, that is a virtual sale and delivery, but approximately one-third of those folks opted to also have a shiny disc sent along. And 37% said they didn’t want a download, just the disc (and the pretty box!!). Adding it up that means that 59% of all online buyers wanted the box. So, while some segments of the industry may tout that virtual product and the cloud will make the store (or the box) obsolete, the consumer’s perception is not quite the same.
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Ok so I butchered the title, I know those are two different movies but both are relevant when thinking about Microsoft’s series of Laptop Hunter ads. Clearly this ad has created a new hope among the Windows faithful/ecosystem that Microsoft is capable of defending itself against the encroachments in perception, recognition and market share that Apple has made in the past few years.
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In his last post, my colleague Steve Baker touched on some of the few shining stars in the dark void that the technology marketplace has been in 2009. If the sun comes up in 2010, though, consumers will begin to find cable and wireless networks more open to access devices at retail than ever.
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Kids. I spend a lot of time thinking about them. Not only do I have four of my own under the age of 12, but the two industries I cover count kids as a primary target audience: 33% of video game industry dollar sales since May ‘08 have been spent against kids ages 14 and under while this same group comprised 82% of 2008 toy industry dollar sales. With both of these industries representing approximately $22 billion in annual sales; that’s a lot of spending influenced by kids across those two industries alone.
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Apple is announcing perhaps the most significant change in iTunes since the company began to offer video downloads several years ago. Today Apple will unlock the digital rights management (DRM) protections that place certain limits on copying and interoperability of music purchased through iTunes. Apple also plans to improve the quality of its music files, and it will also add variable pricing for songs.
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No doubt 2009, and likely 2010 as well, will prove challenging for technology OEMs and retailers alike. Growth prospects appear limited, with much of the opportunity for the near-term seemingly focused on using falling prices to drive increased unit volume and having the dollars fall where they will. This is a bitter pill for consumer technology to swallow; as an industry reared on growth and excitement and the seemingly never-ending advance of technology, the adjustment to these new realities will be painful.
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Spiral Frog has died. You are now probably saying to yourself, I know what spiral ham is, but what’s Spiral Frog?
Spiral Frog was a music download service, once feted by The New York Times as a possible major competitor to iTunes. They had a seemingly ingenious concept, which seems pedestrian today: Ad-supported music downloads.
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Software | Stephen Baker, Vice President, Industry Analysis | 
April 17, 2009 2:02 pm | 
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