Changing Face of the Hi-Tech Market

The hi-tech market — specifically the PC software arena — has gone through many evolutionary changes in a relatively brief period. Starting out as a small community of hobbyists and pioneering developers, the PC software market has become a multibillion-dollar industry spanning the consumer and business-to-business sectors.

As we move forward in the Information Age, the PC software market is, once again, going through a major evolutionary change. The change is embodied by a convergence between software publishers and content providers. This convergence is happening because of the way we are using PCs. Reduced PC costs, CD-ROM/DVD technologies and widespread use of the Internet has turned them into “information appliances,” blurring the distinction between software and content.

As an example, let's examine an Internet-based search engine — what, exactly, is at its core? Is it the software or the content?

It's no surprise that this month was marked by the merger of the Software Publishing Association and the Information Industry Association — a formalized convergence of the software and content industries. A look into these two organizations will provide a better understanding of the impact and challenges that we as marketers will face as the PC software market experiences a major paradigm shift.

The Software Publishers Association was founded in 1984 as the software market was beginning to take shape as a viable business entity unto itself. Over the years, the SPA has grown to become the principal software industry trade association, serving more than 1,200 members internationally. The association represents leading publishers, as well as start-up firms on the Internet, covering the business, consumer, education and enterprise markets. Statistics from the SPA indicate that members account for 85 percent of the revenue in the U.S. packaged and online software industry.

As an SPA member and speaker for many years, I have been involved with many of the milestone changes within this community. One of the most significant changes was the resolution of the retail “channel conflict” dilemma. Software publishers tactfully structured their marketing and promotional activities so their retail presence could profitably co-exist with direct sales activities performed via direct mail marketing. The formalization and acceptance of upgrade and cross-grade promotional activities was a milestone, as publishers realized that these activities alone could account for a major share of their overall bottom-line profits. The adoption of CD-ROM technology was a turning point, because it provided the foundation to push the development of robust and interactive multimedia applications. Last but not least is the integration with the Internet, both as a direct distribution channel and as a platform for software development.

The Information Industry Association has been around longer than the SPA. Established in 1968, the IIA represents more than 550 companies involved in creating, distributing and facilitating the use of information in print and digital formats. The IIA's charter is “to represent the industry's interests in government policy and regulatory matters; to promote the industry and provide early awareness about new developments and emerging technologies; and to provide a business development forum for interaction among top executives in the industry.”

The IIA shows an impressive roster of member organizations, including leading print publishers, online services, cable/communication firms, financial institutions, research firms, global stock exchanges and more. So where is the synergy between these types of content organizations and the software publishing community?

In my opinion, the new relationship between the software and content organizations will provide the needed push for the development of a new generation of consumer software products. I feel that the skew will be toward the consumer side since businesses will always need specific, mission-critical applications that are based on their own data warehouses instead of external content.

In the integrated scenario of software publishers and content providers, the software will act as the vehicle to present, deliver and use content in new and innovative ways. In short, the combination of both industries will ensure further growth and development in our information-based society and economy.

Think of the new possibilities, with major content providers working together with the leading software companies. For one, it provides the infrastructure for the creation and development of new digital delivery platforms. As new standards are put into place, it could even redefine the Web as we know it. Educational software will be taken to an entirely new level, as sophisticated searching and advanced multimedia technologies are used to deliver fresh and updated content. Individuals will be further empowered and enriched, as information ranging from financial data to the arts and music and packaged, bundled and delivered into everyone's homes. It's an exciting new era.

As one who has been very close with the software publishing community, I'm thrilled about the emergence of the Software & Information Industry Association. It sets the stage for an entirely new mindset that synthesizes innovation software development with high quality content that is being warehoused and developed on an ongoing basis.

As marketers, we need to be aware of channel converge as well. We've already seen the software community emerge as direct marketers on the Internet. It makes sense to see the retail community performing DM on the Internet as well. Overall, as direct marketers, these exciting changes open new doors and challenges as we strengthen relationships with customers and place new products into the hands of individuals.

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