The NPD Group Reports Overall Decrease in PC Software Sales for 2003
Demand for Tax and Security Software Helps Negate Dwindling Sales in Education and Games
PORT WASHINGTON, NEW YORK, February 5, 2004 - According to leading marketing information provider The NPD Group, the strong sales of personal finance, security and tax software helped negate dwindling sales in the gaming, operating system and educational software markets for personal computers in 2003. Overall PC software retail sales in 2003 decreased 4 percent to $3.68 billion from $3.84 billion in 2002. Unit sales surpassed 102 million in 2003, falling 9.5 percent from 2002.

Four of the eight software categories tracked by The NPD Group reported unit and dollar sales increases in 2003. System utilities, business, finance and personal productivity all experienced gains while education, operating systems, games and imaging and graphics saw declines in unit sales.

"While much has been made of the poor security habits of consumers, the sales figures indicate that retail buyers are very much aware of their need to provide additional security to their PCs," said Stephen Baker, director of industry analysis for The NPD Group. "With two of the top four best-selling titles in 2003 and revenue that topped $500 million, systems utilities and security products are a key opportunity for retailers."

Finance software continued to be a key revenue generator, with unit and dollar volume for finance titles, including tax software, rising 6 percent over 2002. In 2003, five of the top ten best-selling software titles were tax products. Educational software unit volume fell 26 percent in 2003 on top of a 25 percent decline in 2002. The category has lost almost one-half of its revenue and more than one half its unit volume since 2000.

Despite weak PC game sales in 2003, games remained the dominant PC software product, accounting for one-third of all revenue and more than one-half of the unit sales. Nevertheless, PC games saw a 14 percent decline in both unit and dollar volume from 2002. The system utility category grew 13 percent, based on unit sales buoyed by a growing demand for Internet security software. Over 9.8 million units of system utility software were sold in 2003 compared with nearly 8.8 million units in 2002, a 12.3 percent increase.

Top-selling PC Titles for 2003: Estimated to 100% of the market
Title Publisher Released ASP
TurboTax 2002 Deluxe Intuit Nov-04 $40
Norton Antivirus 2003 Symantec Aug-04 $44
TurboTax 2002 Intuit Nov-04 $20
Norton Antivirus 2004 Symantec Aug-04 $42
TurboTax 2002 Multi State 45 Intuit Dec-04 $29
Taxcut 2002 Deluxe Block Financial Nov-04 $25
MS Windows XP Home Ed Upgrade Microsoft Oct-04 $99
MS Office XP Student & Teacher Edition Microsoft Oct-04 $136
Taxcut 2002 State Block Financial Dec-04 $25
Norton Internet Security 2003 Symantec Sep-04 $65
Source: The NPD Group/NPD Techworld

"The decline in the retail software market in 2003 was the sharpest in the last four years," said Baker. "Despite the lackluster results, primarily caused by the games and education segments, there remains a strong growth opportunity in the consumer software market. One look at the best-sellers list shows that retail buyers remain committed to the PC as the ideal place to manage their money and are willing to invest in software that provides them with enhanced security and productivity."

About The NPD Group, Inc.
Since 1967 The NPD Group has provided reliable and comprehensive sales and marketing information for a wide range of industries. NPD provides critical knowledge on what is selling, where, to whom and why to help our clients make more successful, fact-based business decisions. Today more than 1,300 manufacturers and retailers rely on NPD to help them better understand their customers, product categories, distribution channels and competition in order to help guide their business and positively impact sales and revenues. Information from The NPD Group is available for the following major vertical sectors: apparel, appliances, automotive, beauty, cellular, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, imaging, information technology, music, software, travel, toys and video games. For more information visit www.npd.com.

About NPD Techworld®
NPD Techworld®, a division of The NPD Group, provides sales and marketing information for manufacturers, retailers and distributors in the consumer electronics, information technology hardware, software and cellular industries. NPD Techworld provides the most accurate market intelligence available, including what is selling, where, to whom and why. NPD Techworld combines an unparalleled view of consumer purchasing with critical insight on commercial purchasing for a complete picture of the technology market. Information is delivered online in a secure, Web-based environment by easy-to-use tools that make information accessible and actionable to a wide range of users from executives to sales and marketing to research. Today, more than 95 percent of market-leading companies in the tech industry rely on NPD Techworld for the knowledge they need to drive better, more fact-based decision-making.

For more information:
Jarad J. Smith
jarad_smith@npd.com
703-376-6226

David M. Riley
david_riley@npd.com
516-625-2277