Apples iWork Gains Desktop Territory

By Matt Hines  |  Posted 2006-01-24

Apples iWork Gains Desktop Territory

Rumors that Apple Computers iWork desktop productivity software isnt selling well appear to be false, based on new research from NPD Group indicating that the package finished second only to Microsofts Office at U.S. retail stores during 2005.

While Corels WordPerfect software ranks second overall in the United States across all sales channels, NPD Analyst Chris Swenson said iWork leapfrogged its rival at retail outlets, where many consumers buy their home computing applications.

Microsoft isnt likely to be concerned over its position in the market, as Office accounted for a whopping 95 percent of U.S. retail sales last year, but Apple upped its share to 2.7 percent of the sector ahead of Corels 1.6 percent of the market.

One of the most important factors to consider in analyzing those returns, Swenson said, is that iWork runs only on Apples own PCs, which account for just a small percentage of the U.S. desktop and laptop markets.

Click here to read about Lotus Notes new Mac support.

Among all Mac productivity software, NPD said, iWork represented 17.4 percent of unit sales for 2005, compared to Offices dominant 82 percent.

"The rumor was that iWork was a dog in the marketplace, but it turns out that wasnt the case and that it is outselling Corel in the retail channel, which a lot of people would not have predicted in a million years," Swenson said. "Thats not to say that Corel isnt second to Microsoft if you consider all channels, but clearly Apple is having success with its targeted distribution strategy."

Unlike products from Microsoft and Corel, the analyst said, iWork is available at only a handful of retailers and Apples own stores, which also makes its sales performance an impressive one.

However, Swenson said he also expects sales of iWork to tail off once Microsoft releases its next version of Office and the software is ported over to Apples Mac platform.

"The real story here is the power of using a targeted retail approach, versus a blanket strategy, as Apple is already behind the eight-ball with fewer customers and retailers," Swenson said. "Its all about the concentration of availability for Apple right now."

NPD estimates that its research data, which comes from point-of-sale figures collected at retailers that include and Apples store locations, accounts for approximately 84 percent of all U.S. retail software sales.

Read more here about the latest updates to Apples iWork.

While Corel remains solidly in second place for all channels for U.S. desktop productivity software sales, with roughly 6 percent of the market, Swenson said the company saw its unit revenues fall by .7 percent per unit in 2005. He said the company should take some cues from Apple and do a better job of marketing its products both in stores and online.

"At the end of the day, if youre going to measure Corels performance, retail is only one benchmark, but according to our data retail stores represent a big opportunity among U.S. consumers," Swenson said. "Corel is second overall but needs to focus more effort on its retail channel with in-store promotions and more aggressive marketing."

Next Page: Corel argues that NPDs figures are misleading.

Corel Argues that NPDs

Figures are Misleading">

Corel officials argued that NPDs figures are somewhat misleading, saying that traditional retail stores represent only a small fraction of the market for packaged software.

To get the whole picture, said Richard Carriere, general manager for the Office Productivity unit at Corel, people should consider the entire channel, including online stores, commercial resellers and PC manufacturers.

If you look at NPDs overall numbers, which include most of those distribution methods, he said, WordPerfect "vastly outsells iWork."

"NPD shows that iWork sold around 50,000 units at retail last year, while Corel sold that many to one account in the [Justice Department]," Carriere said. "If you were to take into account [manufacturers] and direct [sales], millions have chosen WordPerfect Office in the last year."

Another promising harbinger for iWork sales has been Apples ability to successfully market its .Mac online software package at its retail stores, which includes Web-based applications for e-mail, publishing photos and collaborating with other people. Swenson said

.Mac was the second-highest selling software title in its stores behind only Mac OS 10.4, which he views as an impressive feat, as such online applications havent yet become popular with consumers.

While companies such as have had a major impact in the enterprise software arena, offering applications hosted online for subscription fees rather than selling hard copies of products with open-ended licenses, Swenson said the trend is only just catching on with people outside the business world.

"People are really just starting to figure out the right formula for software as a service for consumers; anti-virus applications are one good example," Swenson said. "You have to give Apple credit for doing a nice job of getting its in-store sales reps to move something like that, which it appears theyve had some success in doing."

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