Computer software

Discount Store News, Oct 20, 1997

In a surprise move, Nintendo beat out Microsoft by a hair as the top performing brand among retailers.

The software giant lost steam after its massive Windows95 introduction and marketing push fail to make inroads with conventional discounters other than WalMart. It slipped to No. 2 on the list of top performing brands among surveyed retailers by a scant two-tenths of a percentage point.

Microsoft was last year's top performer with retailers by a wide margin. Combined with Windows, the company garnered 43% of the vote among all upscale retailers in the 1996 survey and had equally high numbers with Wal-Mart managers. This year, Microsoft held only 16% of both. It should be interesting to see if Microsoft regains this lost ground with the anticipated introduction of Windows98 at the end of this year.

Nintendo took top honors with retailers, riding high after its N64 introduction. It rose from third place, overtaking Sega, which dropped as a top performer this year.

Sony moved up considerably among retailers, going from 2% to 7%, with significantly higher rankings among Kmart and Target managers than Wal-Mart.

Discounters on the whole seem less confused about software products than in previous years, although brands that don't actually produce software are still named as top performers, such as Handelman, a distributor.

Turning the tables on retailers, consumers named Microsoft their preferred brand for the first time, pulling far ahead of Nintendo. Last year's ratings were close, with Nintendo taking the lead by a single percentage point. In 1997, Microsoft cornered 36% of consumers' votes as the preferred brand, leaving Nintendo/Gameboy with just 11%.

Microsoft is reaching a younger audience these days: 48% of Baby Busters solidly got behind the brand, more than ever before. Microsoft traditionally had a stronger presence among Boomers and Empty Nesters but is clearly gaining ground across demographics. This year, it ranked the lowest with older shoppers, indicating a successful move by Microsoft to infiltrate the younger market.

In another twist, Nintendo/Gameboy rose to the No. 1 software choice over Microsoft among Empty Nesters, reflecting the brand's popularity among a demographic not surveyed here--grandchildren. The over 50 crowd are apparently buying software for others more than for themselves. It is also the age group most likely to skip a purchase if they can't find the brand they want.

Intuit's Quicken is popular among Baby Boomers. The personal accounting software ranked second to Microsoft in this group but didn't merit a mention from the older generation or store managers. Only about half the consumers polled showed a brand preference in this category and a high percentage of respondents cited "other" as their preferred brand.

Once formed, brand preferences are strong. An unusually high number of shoppers said they would leave the store if they couldn't find the brand they wanted. Sixty-nine percent would skip the purchase, second only to computer hardware as a category, roughly the same as last year's figure.

Consumers are far less certain their brands will be available at their favorite discount store. Last year, 70% were sure or fairly certain they would find the brand they wanted, but only 59% could say the same this year.

In general, discounters aren't doing much with software in their stores. As with last year, the list tends to skew toward areas where Wal-Mart has a substantial presence. Retailers in the Northeast, where the chain has a minimal presence, gave zero mention to software brands. Numbers in other regions tend to reflect Wal-Mart's strength, with high numbers in the North Central region corresponding to a strong Target presence as well.

Retailers were slightly optimistic about store sales this year, with 72% forecasting an increase in sales and growth in national brands, a bit up during the past year.

Discounters

Brand          1997   1996

Nintendo        9%     8%
Microsoft       8     22
Sony            7      2
Sega            5     10
Windows         4      6
Handleman       4      5
Sierra          2     --
IBM             2      1
Packard Bell    1      4
Brother         1     --
Discount Store Shoppers

Brand              1997   1996

Microsoft          36%    19%
Nintendo/Gameboy   11     20
IBM                 9     10
Sony                7      7
Quicken             7      2
Sega/Genesis        4     18
3M                  2      3