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Consumer Software Is Expected To Be Next Fast-Growing Segment
From cat food to cookbooks, industry tries to reach broader audience
* By Laurent Belsie Staff writer of The Christian Science Monitor
May 13, 1994 | PITTSBURGH
WANT to sell the next great piece of computer software? Don't think
CD-ROMs. Think cereal boxes. Think soap. Think ... cat food.
``I think there's a fundamental shift going on in the software
business,'' says Kevin O'Leary, president of SoftKey International in
Cambridge, Mass. ``It's not about technology anymore. It's about
marketing, merchandising, brand management, and shelf space.... In
the cat food business, that's all that matters. And in the software
business, that's all that matters.''
Mr. O'Leary is leading a charge to capture what is expected to be the
industry's fastest-growing segment in the next few years: consumer
software. He is not alone. Many major players who made it big selling
to the business customer are expanding their outlook to include the
home.
The draw: Nearly one-third of American homes now have a computer, and
the numbers are expected to rise quickly.
Microsoft Corporation has launched a consumer line, Microsoft Home
brand. Two weeks ago, WordPerfect Corporation launched 19 titles of
its new line of consumer software, WordPerfect Mainstreet. Yesterday,
it announced a 40-city concert tour with Tony Bennett to promote the
line. A concert tour?
``We and our competitors can learn a lot from the marketing
strategies that have been adopted in other industries,'' explains
Glen Mella, WordPerfect's vice president of marketing communications.
``We're really trying to reach a much broader mass market.''
Consumer software is a little hard to define. Companies know what it
is not. Their marketers are fond of adapting the old Oldsmobile ads
by saying, ``This is not your father's spreadsheet. It's also not as
expensive.''
Mr. Mella says he plans to list its new Mainstreet products for $29
to $149 apiece, compared with the typical business software package
that might sell for $300 to $495. Its hottest seller early on is
WordPerfect InfoCentral, a $149 personal information manager that
serves as a kind of computerized organizer of ideas and appointments.
This month, Microsoft introduced an upgraded version of its CD-ROM
reference library, Microsoft Bookshelf, for $99. Users of the
previous version can get a $30 rebate. And Intuit Inc., which sells
the leading personal finance package, Quicken, has experimented with
all kinds of pricing promotions to capture the market - from $9 to
$70.
But the boldest vision of what the consumer software industry will
look like comes from O'Leary, who started his marketing career
selling Nabisco's Miss Mew cat food.
``You're going to see an economic model where software companies
become giant incubators for good ideas,'' he says, likening it to the
record business, which takes the creative product of an artist and
markets it. SoftKey claims access to 15,000 stores. Although it is
only about one-sixth the size of WordPerfect ($120 million in sales
versus $700 million), it has far more products. Today, it sells 166
software titles - from the Sports Illustrated 1994 Multimedia Sport
Almanac to the MasterCook II computerized cookbook to an educational
mystery game, Moriarty's Return.
With so many titles, SoftKey can experiment. If a new title does not
work in, say, two weeks, it can be replaced with something else. Last
quarter, the company brought out 18 new software products. This
quarter, it is aiming for 20.
If it succeeds, the push into consumer software could transform the
industry. It will probably encourage new kinds of software aimed at
the home computer, these executives say. It may well drag down
software prices, which have already fallen substantially. The move
also means software will start showing up in more kinds of stores.
``Nowadays, we're starting to do business with the K marts,
Wal-Marts,'' Mella says.
The changed outlook could spin off new kinds of marketing companies.
PC Week, a trade magazine, recently profiled Addie Swartz, whose
Concord, Mass., company, BrightIdeas Inc., has started selling
children's software door-to-door. It is the industry's ``Avon
Calling'' approach to marketing new titles.
But will it be just like selling any old cat food? Some differences
remain.
Software companies still have to market themselves to high-powered
industry analysts and the trade media, Mella points out.
And cat food companies do not have to provide technical support for
their products. ``The cat doesn't call up and say: `I don't like the
flavor of this tuna,' '' O'Leary says.
But software companies, already struggling with how to finance the
increasing load of technical support, are likely to face even greater
challenges if they have to turn out more products at cheaper prices.
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