Users often decide to upgrade software rather than hardware during tough economic times. Nonetheless, the economic recoveries in Europe and Japan, coupled with sustained growth in Asia and Latin America, should further boost software sales. Of the world's top 10 software suppliers, six were American. They supplied 63 percent of the Western European market and 54 percent of the Japanese market, regions where domestic suppliers traditionally hold stronger positions. They hold the largest market share in countries outside Western Europe and Japan, supplying 73 percent of these markets.
Several factors contribute to the competitive strength of the U.S. industry.
Foremost is the leading role U.S. vendors played in developing the software industry. This has given U.S. firms a technological edge and made the United States the locus of high-quality, innovative software development. The size and sophistication of the U.S. market also contributed to the competitiveness of U.S. vendors, resulting in a variety of niche products, a great number of firms, and intense competition. The principal competition to U.S. vendors comes from companies in Japan and Western Europe. Three Japanese firms and one European firm are among the world's top 10 software suppliers.