Software - NAFTA

NAFTA

The Software market is expected to witness significant growth in the coming years, with projected revenue of US$389.80bn in 2024.
Among the various segments, Enterprise Software is set to dominate the market, with an estimated market volume of US$161.60bn in 2024.
This trend indicates the strong demand and adoption of enterprise software solutions in the NAFTA region.
The market is also anticipated to exhibit a steady annual growth rate (CAGR 2024-2029) of 4.14%, leading to a substantial increase in market volume.
By 2029, the Software market is projected to reach a size of US$477.40bn.
This growth can be attributed to factors such as technological advancements, increasing digitalization, and the need for efficient software solutions across industries.
In terms of geographical distribution, United States is expected to generate the highest revenue compared to other countries in the NAFTA region, with an estimated revenue of US$363.40bn in 2024.
This highlights the dominance of the US market and its leading position in the Software market industry within the NAFTA region.
In NAFTA, software companies in the United States are leading the market with innovative solutions and cutting-edge technology.

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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Market

Region

Region comparison

Currency

Analyst Opinion

The North American Free Trade Agreement (NAFTA) has been a significant driver of the Software market in the region, with the United States, Canada, and Mexico being major players in the industry.

Customer preferences: Customers in the NAFTA region have shown a strong preference for cloud computing, big data analytics, and artificial intelligence (AI) in recent years. The demand for Software as a Service (SaaS) has also been on the rise, as it offers more flexibility and cost-effectiveness for businesses. Furthermore, there has been a growing interest in cybersecurity and data privacy, with customers seeking more secure and reliable software solutions.

Trends in the market: The United States is the largest Software market in the NAFTA region, with a highly competitive and innovative industry. The market has seen a significant shift towards subscription-based models, with companies such as Adobe and Microsoft moving away from traditional licensing models. The rise of mobile applications has also been a significant trend, with companies investing in mobile-first strategies to cater to the growing demand for mobile software solutions.In Canada, the Software market has been growing steadily, with a focus on niche markets such as healthcare and financial services. The country has also seen a rise in startups, with Toronto being a hub for tech innovation. The trend towards cloud computing has also been evident in Canada, with companies such as Shopify and Hootsuite offering cloud-based solutions.Mexico has been experiencing a digital transformation in recent years, with a growing demand for Software solutions in various industries such as manufacturing and retail. The country has also seen a rise in startups, with Mexico City being a hub for tech innovation. The government has been investing in digital infrastructure, which has led to a rise in demand for Software solutions.

Local special circumstances: The Software market in the NAFTA region is highly competitive, with companies such as Microsoft, Oracle, and IBM dominating the industry. However, there has been a rise in startups and smaller players, particularly in Canada and Mexico. The regulatory environment in each country also differs, with the United States having more stringent data privacy regulations compared to Canada and Mexico.

Underlying macroeconomic factors: The NAFTA region has been experiencing steady economic growth, with the United States being the largest economy in the region. The rise of e-commerce and digital transformation in various industries has led to a growing demand for Software solutions. The COVID-19 pandemic has also accelerated the adoption of digital technologies, with businesses seeking more efficient and cost-effective ways to operate. However, the uncertain political climate and potential changes to NAFTA could impact the Software market in the region.

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.