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Capitalizing on the European Market
Software Industry Conference 17-19 July 2008
Carmen Sebe, CEO / Avangate BV
1. Market overview – why Europe?
Europe – a software market as big as the US
2. What to consider when going to Europe
Overcoming the entry barriers
3. Some ideas on how to generate money from
a foreign market
Agenda
Market overviewGlobal Software Market
In 2011, the Global Software Market is forecast to have a value of $271.8 billion, an increase of 33.6% since 2006.
Global Software Market Value Forecast: $ billion, 2006-2011Source: Datamonitor
Market overviewGlobal Software Market Segmentation
•Americas region accounts for 42.1% of the global market's value.
•European region generates 36% of the global market's revenue.
% Share, by ValueSource: Datamonitor
Market overviewEuropean Software Market
In 2011, the European Software Market is forecast to have a value of $91.9 billion, an increase of 25.4% since 2006.
European Software Market Value Forecast: $ billion, 2006-2011Source: Datamonitor
Market overviewEurope by Country
• France is the most lucrative software market in Europe, accounting for 23.7% of the European market's value.
• United Kingdom generates an additional 22.2% of the regional market's value.
% Share, by ValueSource: Datamonitor
Software Piracy in Europe
The software piracy record in Europe is mixed:
o Austria, Finland have the lowest rates Worldwide, 26%
o Average in EU – 36%
o Central and Eastern European rate 69%
o Rates in Russia and Ukraine have experienced the largest decreases in the world, but still very high – around 80%
High piracy regions are also high market growth regions - for example: IT spending in Russia in the next five years is expected to grow between 15 and 20 percent -
• Despite it’s late start Europe is now a mature eCommerce market and one of the biggest markets in the World.
• A mature market concentrated in Northern Europe (United Kingdom, Germany and the Scandinavian countries) where 60- 80% of Internet users are eShoppers.
• A growing market in France, Italy and in Spain with a ratio of eShoppers to Internet users the weakest (between 35-50% according to markets), but a very strong growth rate amongst new eShoppers which bodes for excellent potential for the short and long term.
eCommerce Opportunities in Europe
eCommerce Opportunities in Europe
• A budding market represented by Eastern Europe, with
different levels of maturity according to the countries
• 2008 and 2009 years will be significant for the development
of e-commerce in Europe
Opportunities
• Europe – a market as big as US
• A software market accounting 91.9$ billion
• Both mature markets and new markets
• IT spending for decreasing the software piracy
• High end market
• Favorable exchange rate $/€
Entry barriers
• Language barriers
• Multiple currencies, eased by adoption of the Euro
• Differing tax and VAT regimes
• Uncertainty over and pending legislation on ecommerce taxation
• Cultural differences
Is Europe a good place to be?
Product LocalizationEnglish only No cost
Help, Manuals, etc. - targeted countries languages
Translation Cost: $2000/10000 words
Product Localization - best selling countries
With a dedicated Partner $3000 - $10000
With a partner Associated No cost
What do I need to sell in Europe? Product Localization
What do I need to sell in Europe? Customer Support
Customer Support LocalizationSupport in English No cost
FAQs, Tutorials, etc. - targeted countries languages
Translation Cost
Multilanguage Support
Using Call Center
$6-$15 / h
$3000 - $10000In house Salary
A Partner No cost No cost
What do I need to sell in Europe? VSO – ConvertXtoDVD - Product Localization
What do I need to sell in Europe? VSO-Software.fr – Website Localization
What do I need to sell in Europe? VSO – ConvertXtoDVD - Product Localization
What do I need to sell in Europe? VSO-Software.fr – Website Localization
What do I need to sell in Europe? VSO-Software.fr - Customer Support
What do I need to sell in Europe? VSO-Software.fr - FAQs
What do I need to sell in Europe? VSO-Software.fr - Tutorials
What do I need to sell in Europe? VSO-Software.fr - eMail
What do I need to sell in Europe? Other things to consider
PRICING:
US $ for the US ; Euros for Europe
• Online: to have an eCommerce provider that allows to set prices in different currencies
• Channel: to have a price list in Euros
What do I need to sell in Europe? Other things to consider
LEGAL
VAT • EU countries for direct sales:
– The end user will pay their country VAT– Should register in an EU country for VAT
reimbursement• Non -EU countries: VAT does not applies.
Trade mark– Register in EU to protect the mark (should be used in
a 5 years period of time)
Start selling in Europe Make your product available online
What you have to consider
• Cultural differences
• eCommerce is available in Europe from 1998 since in the US is available since 11 August 1994 (according to the University of North Carolina - the first retail Internet transaction probably took place then).
• More and different payment methods available
• Local online promotion
Your partner will:
• Generate revenue for you
• Market your product and generate brand awareness
• Local support and help you with the localization
What you have to do:
• Generate an attractive partnership program
• Look for the right partner (or at least A partner)
• Support your partner actively
Start selling in Europe Setting up a Distribution Channel
Start selling in Europe Partnership Program
Commercial conditions
• Partnership levels & Reseller discounts
• Payment terms
Partner Training & Support
• Online
• Face to face
Marketing coop-fund and joint marketing activities
Start selling in Europe Look for Partners
Where and how to look for partners:
• Choose a country, if you have a reason to, or go generally
• Local IT events: conferences, trade shows
• Referral from your business partners or clients
• Online – sign up
Start selling in Europe DrWeb.com - Partnership Program
Start selling in Europe DrWeb.com – Look for Partners
Conclusions
• Going to Europe is not very expensive
• You can go by yourself, but it is more profitable and
easy with a partner
• Balance your revenue
• Minimize the business risk
• More attractive for venture capital