Third Quarter Software Sales $1.7 Billion

Strength in Consumer Products, and Rebound in Core Business Productivity
Products Fuel 15% Growth, While DOS Business Applications Plummet

December 13, 1994 (Washington, DC) -- The Software Publishers Association
(SPA) announced today that sales of personal computer application software
in the US and Canada reached $1.7 billion in the third quarter of 1994
(3Q94), a 15.1% increase from $1.48 billion in the third quarter of 1993
(3Q93). For the first three quarters of 1994, sales were $4.7 billion, an
11.2% increase from the $4.2 billion registered in the first three
quarters of 1993. Unit sales were up 63% for 3Q94 and 65% for the first
three quarters.

A total of $1.06 billion of Windows applications were sold in 3Q94, an
increase of 49% from last year's third quarter. Windows sales for the
quarter were paced by strong growth in the entertainment, home education
and word processor categories. For the first three quarters, sales of
Windows applications reached $2.94 billion, a 45% increase from the same
1993 period.

Sales of Macintosh software continue to grow at or just above overall
industry growth. Sales of Macintosh applications reached $316 million in
3Q94, a 17% increase from 3Q93. For the first three quarters of 1994, $832
million in Macintosh software was sold, an 11.5% increase from the first
three quarters of 1993.

DOS Business Application Sales Fall

DOS applications sales continue to fall, declining 42% to $305 million in
3Q94. DOS entertainment products accounted for better than one in three
DOS application dollars in the quarter. DOS business application software
sales have fallen off so much that for 3Q94, DOS entertainment products
outsold spreadsheets, word processors, databases, integrated products,
utilities, presentation graphics, project management, PIM and language &
tools products combined.

Consumer Product Sales Maintain Sales Growth

Among the product categories, consumer products again led the charge. After
a feverish first half, with growth in excess of 120%, home education
products' sales growth slowed in 3Q94, but remained the fastest growing
category. For the quarter, sales were $107 million, up 61% - four times
the industry average growth and nearly two times as fast as entertainment
products, the next fastest growing category. Entertainment software sales
in 3Q94 were $171 million, a 32% increase from 3Q93. Entertainment
software was the third largest category of software in 3Q94 and remains
the only category where more DOS products were sold than Windows
products.

Word Processor and Spreadsheet Categories Remain Largest

For both the third quarter and the first three quarters, word processors
and spreadsheets remain the largest categories of application software in
the US and Canada market. Word processor sales were $272 million in the
quarter, a 20% increase from 3Q93. Spreadsheet sales were $217 million, a
16% increase.

For the first three quarters, word processor sales were $730 million (up
5.4%), while spreadsheet sales were $620 million (up 5.5%). Database sales
rebounded in 3Q94, reaching $112 million, a 22% increase. For the first
three quarters of 1994, database sales were $286 million, a 13% decline
from the period last year.

"1994 will be seen as a watershed year for the personal computer
application software business," said David Tremblay, Research Director of
the SPA. "The rapid emergence of the consumer market has changed the
landscape of the software industry. Entertainment software is now the
third largest category of software for the industry. And, with its rapid
growth this year, home education software is now about as large as is
database software. The emergence of the consumer market marks a
fundamental shift in the character of the industry. Companies are having
to learn how to make money selling at lower, consumer market price points
and how to sell in traditional retail channels."

The Software Publishers Association is the principal trade association of
the PC software industry. Its 1,150 members represent the leading
publishers in the business, consumer, and education markets. The SPA has
offices in Washington, DC, and Paris, France. SPA press releases are
available on-line through CompuServe (GO:SPAFORUM), and from SPA's faxback
service at 800 637-6823.

Software Publishers Association
1730 M St, Northwest, Suite 700, Washington, D.C. 20036
202-452-1600,  Fax: 202-223-8756

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