Western Europe PC Application Software Sales Reach $307 Million in Third
Quarter, 1994

Soft Pricing Contributes to 20% Decline in Revenues

December 19, 1994 (Washington, DC) - The Software Publishers Association
(SPA) announced today that personal computer application software sales in
Western Europe were $307 million for the third quarter of 1994, a 20%
decline from the third quarter of 1993. For the first three quarters of
1994, sales were $1,254 million, a 1% increase from the first three
quarters of 1993. For the quarter, overall unit sales increased 65%, and
were up 80% for the first three quarters.

Revenues Decline in All Three Major Platforms

For the first time, Windows applications revenues in Western Europe
declined year over year. Windows application sales for 3Q94 were $259M, a
7% decrease from 3Q93. On the strength of 25 to 30% growth in the first
half of 1994, Windows applications sales for the first three quarters were
up 17% to $1,054M. Third quarter 1994 DOS application sales were $24.3M
(off 65%), while Macintosh application sales were $20.1M (off 28%). For
the first three quarters of 1994, DOS applications were $111M (off 53%),
while Macintosh applications were $78.3M (off 11%).

Half of Western Europe Regions Report Revenue Declines in Q3 '94

The table below shows the sales results by country/region for Western
Europe. Five of the ten regions, and all three of the largest regions,
reported revenue declines in Q3 '94. The UK/Ireland region had the highest
sales in the quarter and suffered the smallest decline of the big three.
Revenues in Q3'94 were $85.5 million, a 12% decline from Q3'93.
Germany/Austria was the largest region for the first three quarters, but
suffered a 43% decline in revenues in Q3'94, to just under $70 million.
France was the number three market in Q3'94, with sales off 16% to $47.7
million.

Sales Downturn Widespread

"The figures show that the sales slowdown in the third quarter in Western
Europe was widespread, and not confined to just a few markets," said David
Tremblay, the SPA's Research Director. "Only in the Benelux and
Spain/Portugal regions were software sales growth in Q3'94 better than it
had been in the first half."

"The figures also show that the culprit in the downturn is pricing," said
Gerard Gabella, SPA Europe Managing Director. "The industry's quarterly
unit growth rates have been between 60 and 90% so far this year. But,
average prices are down so sharply from 1993 that revenue growth for
quarters 1, 2 and 3 were 10%, 12% and (20%), respectively. In this pricing
environment, it has become very hard for application software companies to
make money in Western Europe."

Thirty-eight primarily US-based software firms participated in the SPA's
data program by submitting confidential data to the accounting firm of
Arthur Andersen, which prepared the report for the SPA. Among the
participants are: Adobe, Borland, Claris, Lotus, Microsoft, Software
Publishing, Symantec, and the WordPerfect Division of Novell. The sales
data were collected in 33 software categories (including word processors,
spreadsheets, presentation graphics, and others) and in six operating
systems (including DOS, Macintosh, and Windows).

The Software Publishers Association is the principal trade association of
the PC software industry. Its 1,100 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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