The need to improve software sales revenues, the increasing importance and cost of localisation, data and predictions on Microsoft’s current and future sales of NT and Windows95 were the hottest topics in Cannes at the Software Publishers Association Europe’s recent annual conference. Steve DeWindt, co-president of broadline distributor Computer 2000 GmbH, detailed the problems his […]
The need to improve software sales revenues, the increasing importance and cost of localisation, data and predictions on Microsoft’s current and future sales of NT and Windows95 were the hottest topics in Cannes at the Software Publishers Association Europe’s recent annual conference. Steve DeWindt, co-president of broadline distributor Computer 2000 GmbH, detailed the problems his company faces in increasing software revenues. He first noted that Europeans are coming out of the recession cycle, getting over their pessimism, personal computer sales are up significantly and the overall outlook for the industry is good. Software sales revenues in the channel, however, he said, are not growing as fast as everything else, so as a percentage, they are dropping. Neither are software vendors helping the situation, he said, with lower average selling prices; growing use of software suites; more software bundled or preloaded on personal computers, which cheapens the perception of software and makes it difficult to sell individual titles; and licensing, which makes it difficult for the channel to focus on sales of titles. Noting that the biggest potential for improving sales lies in stopping piracy, De Windt disagrees that piracy is caused by software in Europe being two to three times more expensive than the US. There is still a price delta, but it is not that great. Price alone isn’t the issue: they dropped prices a lot in Russia, but piracy is still astronomical, he said. In fact, Software Publishers Association research presented at the conference showed that the delta between Europe and North America on the average sale price has narrowed, particularly since 1992, and that Europe’s prices have dropped 85% since 1989. Localisation of software is taking on increasi ng importance as multimedia and content-rich titles proliferate and as companies turn to more localisation to penetrate new markets that cannot use English versions. The presentation by Thomas Marcus, vice-president, business development and general counsel for CD-ROM title publisher Broderbund Software Inc, was a perfect example.
Kid will be run over
He remarked on the recognition by most of the speakers that the consumer market has arrived in Europe, adding that Broderbund opened a UK office early this year and is localising its Banner Blue and Family Tree Maker titles for the European market. Localisation is the key to our success in Europe. There’s a lot we have to do to make the products work besides translate word for word. For example, with our kids’ product that teaches safety, we have to change the admonition to look left and then right in crossing the street, to one of right and left for the UK or the poor kid will be run over! We have suffered from our initial products not being developed to be localised, so they didn’t come out as soon as we wanted. But Myst will be in French and German in July at a price consistent with the market, he announced. He added that the bookstore channel in Germany is expected to account for 20% to 25% of educational software by the end of next year. Bertrand Vacher, a consultant engineer for Paris-based Opera Traduction, which was responsible for the French versions of Microsoft Money and several Microsoft CD-ROM titles, says The emergence of multimedia is extending the aspects of localisation, with the addition of image and sound. Soundtracks that would be pleasing to one nationality are often unacceptable for another, for instance. Vacher sees the localisation of content products growing, particularly with the increase in the number of CD-ROM readers in Europe. Vergnes echoed that sentiment, saying that as Microsoft sales of multimedia and content-rich products to the home market increase, it will be more obliged to do localisation. Already the sum Microsoft spends on localisation is rising. But, every time we localise a software product, we see the sales go up by two and three times, he said.
By Marsha Johnston
Because localisation costs a lot, he says, you can ask yourse
lf if there isn’t a certain point at which it costs too much to do because you won’t recuperate the cost with enough sales. In Denmark, for instance, there are only 5m inhabitants and you can’t sell Danish software to anyone else. Nonetheless, Microsoft has translated all of its major products into Danish and even into Catalan, Basque and Slovenian, the last two of which have populations of 2m or less. The story of International Translation & Publishing in Bray, Ireland, is a testament to the expansion of the software localisation industry. Manager Finbarr Power says the company doubles in size every year; last year it had revenues of $10m and will probably realize between $25m and $30m this year. It has 50 full-time engineers and between 600 to 700 contract translators and engineers, handling all types of products, data communications, word processors and spreadsheets, databases, printers, interface cards, personal computers and storage devices. Lots of talk circulated about both NT and Windows95, with NT 3.5 winning the Ziff-Davis Europe Software Excellence Award for desktop environment product. Before NT received its prize, Vergnes noted how important some European companies have been to NT’s success: SAP, PSI, an Italian firm with a point-of-sale application, Ouroumoff Informatique, with retail and distribution management, and Menhir, a London-based company with branch banking applications. Vergnes said Microsoft’s various European country subsidiaries are forecasting that between 15% to 45% of the Windows installed base will adopt Windows95 within 12 months. It depends on how recently they’ve adopted Windows and which machines they’re using [if they will have enough memory for the product], he said. In a later session, Andrew Baul-Lewis, from Dataquest Europe, said he believes a 45% replacement rate for Windows95 in one year is unachievable. It will probably be between 25% to 30%, also due to the need for 8Mb RAM and then 16Mb for 32-bit applications. One of the most interesting European companies Computergram came across at the conference was Scribona AB, the largest wholesale distributor of computers and other office products in Scandinavia; number one in Sweden, number two in Finland. With $400m in revenue from only four countries, it is larger than any other continental European distributor and has seen its fastest growth in the last 18 months. Scribona Computer Products AB represents 55% of the group’s total revenues and gets most of the interest from investors, said president Kjell Berge. Little wonder. According to distribution industry expert Denise Sangster, Scribona is only one of two distributors in Europe (the other being Ingram Micro Inc) with a system that can give the chief executive day-to-day figures on what’s selling and what’s not. Vergnes also said that Microsoft is seeing important European consumer products from companies like EMME, Arborescence, Microfolie and ODA. They are becoming good sellers in their local markets and, when they are translated, they will become best sellers in those markets and the US, eventually.
At the Ziff-Davis awards, the following companies were picked for excellence in their national markets: BVRP Software (France), for Winphone, which is sold in over 60 countries; CAS Software GmbH (Germany), for MAP&GUIDE 3.0, which it is localising for seven European markets, and; Sareen Software, for Office Talk. In each country, two other companies were nominated: DDTEC and Loxane in France; Bavaria-Soft Datentechnik GmbH and Ullstein Soft Media in Germany, and; Microcosm Ltd and Superbase Ltd in the UK. In other remarks at Software Publishers Association Europe, Bernard Vergnes, president of Microsoft Europe, said that the opportunity for the Microsoft Network in Europe could be greater than in the US if telecommunications costs were not between four to five times what they are in the US. We are trying to lobby European telecommunications providers to have the per-minute connect charges the same as in the US, he said – UK carr
iers now charge by the second – telling Computergram later that he couldn’t be certain they would succeed, but that were using the argument that the lower the cost, the more use the operators will see. It’s true that the [on-line services] competition is less entrenched than in the US, but there is more of it, in that each country has two or three of its own services, which represent competition, he added. Microsoft reports that it has has signed up about 70 companies to provide content for the Microsoft Network in Europe, including Nouvelle Observateur, Mondadori Informatica, Club Mediterranee, and WEK Verlag. Also, within a year, Microsoft Network will have a gateway to the Internet, he said.