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June 11, 2012

US software publishing industry grow 4.5% in 2012: Report

Driven by strategic acquisitions and product development efforts by publishers

By CBR Staff Writer

The US Software Publishing industry saw rapid growth in the five years to 2012, and is expected to have average annual revenue growth of 4.5% to $182.7bn, according to a latest report by IBISWorld.

In 2012, the research firm expects revenue to grow 5.3% as businesses and consumers increase their investments in software, computers and smartphones.

With the crises affecting the housing, automotive and financial sectors, related businesses, investments in software were reduced, causing a 3.5% revenue decline in 2009 to $145.4bn, though the software publishers saw little trouble in staying profitable.

IBISWorld industry analyst Dale Schmidt said a high profit margin came despite the increasing presence of software piracy.

"Publishers were also not idle during the slowdown, but instead focused on strategic acquisitions and product development," he added.

The report shows the software publishing industry has been undergoing consolidation as software companies are looking to provide a more extensive and complementary range of products in order to reach a larger customer base.

Companies usually achieve these goals through a combination of internal development and acquisitions, such as Oracle’s 2009 acquisition of Sun Microsystems including Microsoft’s purchase of a number of companies that developed software relevant to search engines and web-based software platforms, such as the acquisition of Skype in 2011.

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"Participating across an increasingly diverse array of software platforms is practically impossible without resorting to such acquisitions."

"As continued technological development drives innovation during the next five years, acquisition activity within this industry will grow more robust."

Competition still occurs in the form of free, low-cost or rental-based cloud computing services from companies like Google.

Growth in developing countries and improving technologies, particularly those related to semiconductors and telecommunications, is creating expanded markets for publishers.

IBISWorld noted mobile computing devices like cell phones and tablet computers are opening up entirely new avenues.

Further, companies will move toward "cloud computing," which will open up software possibilities for using mobile phones like tablets, as they will no longer be hampered by their low storage capacity.

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