Software - United Kingdom

United Kingdom

Revenue in the Software market is projected to reach €33.30bn in 2024.
Enterprise Software dominates the market with a projected market volume of €13.89bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2028) of 6.49%, resulting in a market volume of €42.82bn 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

The United Kingdom is one of the leading countries in the technology industry, with a thriving software market that is constantly evolving.

Customer preferences: UK customers have a strong preference for software that is user-friendly, efficient, and cost-effective. They are also increasingly concerned with security and data protection, which has led to a rise in demand for cybersecurity software. Cloud-based software is also becoming more popular, as it allows for greater flexibility and scalability.

Trends in the market: One of the major trends in the UK software market is the shift towards Software as a Service (SaaS) models. This has been driven by the need for greater flexibility and cost-effectiveness, as well as the increasing availability of cloud-based technologies. Another trend is the rise of open-source software, which is becoming more popular due to its lower cost and greater flexibility.

Local special circumstances: The UK software market is highly competitive, with a large number of small and medium-sized enterprises (SMEs) competing with larger multinational companies. This has led to a focus on innovation and differentiation, with companies looking to develop unique software solutions that meet the specific needs of their customers. The UK government has also supported the growth of the software industry through initiatives such as the Tech Nation programme, which provides funding and support for tech startups.

Underlying macroeconomic factors: The UK software market is influenced by a range of macroeconomic factors, including economic growth, consumer spending, and government policies. The UK economy has been growing steadily in recent years, which has led to increased investment in the technology industry. Consumer spending has also been strong, which has supported the growth of the software market. Government policies, such as the introduction of the General Data Protection Regulation (GDPR), have also had an impact on the market by increasing demand for cybersecurity software. Overall, the UK software market is expected to continue to grow in the coming years, driven by ongoing technological innovation and increasing demand for cloud-based and cybersecurity software.

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.