Software sales slump in wake of GST

Retail software sales may be down but the market is definitely not out, according to latest figures from market analyst Inform.

According to Inform analyst Phil Burnham, the negative growth that dogged July sales continued through August, yet while overall software sales continued to slide, all was not doom and gloom.

"The main thing pulling the market down is financial software sales," Burnham said. "We saw exceptionally high sales in June and that hasn't helped August growth rates, but the market is not collapsing - that's not happening."

Declining sales in accounting and financial software and increasing software prices following the boom surrounding GST implementation are to blame for the overall dip in the market. Other sectors, including creativity software, operating systems and productivity software, recorded growth throughout August.

"Sales in finance software are now at the same level as they were during March. What we are seeing is a return to equilibrium after a period of rapid growth," Burnham said.

"Even in July, a lot of companies which had not adopted financial solutions were still purchasing software. But the market has dropped off tremendously in August and that is purely due to the finance sector returning to its normal level.

"Even operating systems sales have seen positive growth with the release of Window ME, although sales have been slower than expected."

Productivity software proved to be the biggest seller with a monthly growth rate of 38 per cent. Antivirus software sales jumped 95 per cent, with other utility software up 40 per cent on July figures. Symantec's Norton Anti Virus 2000 made up around 53 per cent of antivirus sales, ahead of Network Associates with 41 per cent and Computer Associates with 3 per cent. Other Symantec utility products account for five of the top 10 best selling titles in that sector.

Symantec managing director John Donovan said a combination of traditional market strategies, end-user marketing and good software had helped keep the company at the top of the sales list.

"We are very traditional in terms of our sales channel - all our product goes through Express Data and Tech Pacific," he said, adding that the key element was ensuring distributors always had stock available.

"But we also do a lot of marketing to end users and that has a pull-through effect in the channel."

Most of Symantec's sales come from its retail partners such as Dick Smith Electronics and Officeworks and has been involved with Harvey Norman since the retailer began offering IT products.

"It is a reflection on Symantec that it is able to pick the markets that it can be strong in and build a strong brand identity," Donovan said.

He said the dramatic drop in antivirus sales after June was probably a reaction to GST implementation.

"I think a lot of people were using their $200 rebates to buy whatever they wanted. Then the market just fell in a heap. July was not too bad for us from a sell-through perspective, but September has been quiet with the Olympics."

However, the market is expected to pick up from October through to December, he said. "Hardware vendors are beginning to come out with new products and in many cases, new hardware equals new software."

"Antivirus software saw a huge drop off in July," Burnham said. "That could just have been consumers buying pre-GST when software was cheaper so July sales missed out and that market is evening out."

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