Software - Japan

Japan

Revenue in the Software market is projected to reach €22.95bn in 2024.
Enterprise Software dominates the market with a projected market volume of €9.57bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2028) of 3.84%, resulting in a market volume of €26.68bn by 2028.
In global comparison, most revenue will be generated in the United States (€323.20bn in 2024).

Key regions: United States, Canada, Germany, China, Japan

Definition:

In general, software is defined as a set of instructions written as programming code to execute specific tasks on a computing device. The Software market covers a wide range of software products and solutions that are publicly sold by various companies. Most software solutions in this market are designed for professional use, but some can also be suitable for personal use. They can also range from basic productivity tools such as word processors and spreadsheets to complex software solutions such as project management tools, graphic design software, and enterprise resource planning software.

Products in the Software market can be obtained in two ways: as on-premises software that is sold via a transactional license or a subscription and as cloud-based software (software as a service/ SaaS) that is most frequently sold as a subscription.

Structure:

The market contains four markets that are based on the functionality of the software:

Productivity Software refers to application software that supports activities such as producing documents, spreadsheets, drawings, and presentations. This market includes Administrative Software, Collaboration Software, Office Software, Creative Software, and Construction and Design Software.
Enterprise Software refers to all software that supports essential large-scale business activities such as enterprise resource management, customer management, and supply chain activities. This market includes Enterprise Resource Planning Software, Customer Relationship Management Software, Business Intelligence Software, Supply Chain Management Software, Content Management Software, and Other Enterprise Software.
Application Development Software refers to software and tools that help the overall application development process.
System Infrastructure Software refers to software that provides the base framework for operating and managing organizational processes and services on hardware devices.

Additional Information:

The Software market comprises revenue and revenue change as the key performance indicators. Only revenues that are generated by primary vendors at the manufacturer price level either directly or through distribution channels (excluding value-added tax) are included, and revenues generated by resellers are excluded. Revenues are generated through both online and offline sales channels and include spending by consumers (B2C), enterprises (B2B) as well as governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed.

Key players in this market include Microsoft, Adobe, SAP, Oracle, and Salesforce.

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Analyst Opinion

Japan, a country known for its technological advancements, has a thriving software market that is constantly evolving.

Customer preferences: Japanese customers have a strong preference for high-quality software that is reliable, efficient, and user-friendly. They also value software that is tailored to their specific needs and preferences. In recent years, there has been a growing demand for cloud-based software solutions, as well as software that is compatible with mobile devices.

Trends in the market: One of the key trends in the Japanese software market is the increasing adoption of artificial intelligence (AI) and machine learning technologies. Many companies are investing in these technologies to improve their business operations and gain a competitive edge. Another trend is the growing popularity of software as a service (SaaS) models, which allow companies to access software on a subscription basis rather than having to purchase and install it on their own servers. Finally, there is a trend towards greater collaboration between software companies and other industries, such as healthcare and finance, to develop innovative solutions that meet specific market needs.

Local special circumstances: Japan has a unique business culture that places a strong emphasis on relationships and trust. As a result, many software companies in Japan focus on building long-term relationships with their customers and providing high-quality customer support. Additionally, the Japanese government has implemented policies to encourage the growth of the software industry, such as tax incentives for research and development and funding for startups.

Underlying macroeconomic factors: The Japanese economy has experienced periods of both growth and stagnation in recent years, which has had an impact on the software market. However, the government's efforts to promote innovation and technology have helped to drive growth in the industry. Additionally, Japan has a highly skilled workforce and a strong tradition of technological innovation, which has helped to attract foreign investment and talent to the software market.

Methodology

Data coverage:

The data encompasses B2B, B2G, and B2C enterprises, except for the Enterprise Software segment, in which consumer (B2C) spending is not considered. Figures are based on the allocation to the country where the money was spent at manufacturer price level (excluding VAT).

Modeling approach / Market size:

Market sizes are determined through a top-down approach with a bottom-up validation, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of the market-leading companies and reports from our primary research. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, level of digitization, GDP sector composition, and observed level of software piracy. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. The main drivers are the GDP and the level of digitization.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic is considered at a country-specific level.