Most people, when asked to name a piece of PC software, would probably mention a Microsoft product first. They might then recall a games publisher, an anti-virus brand or a creative suite. A quick glance at the PC Retail software charts, however, reveals that the majority of them are dominated by just two companies: GSP and Focus Multimedia.
GSP was acquired a few months ago by global software giant Avanquest and the incumbent MD of GSP – Dave Brass – is now in charge of UK retail products for the combined company.
I started by asking Brass why he thinks the acquisition happened. "GSP is a very good fit for Avanquest," he says. "The group that they purchased was actually EMME – a public company listed on the French Nouveau Marche, as is Avanquest. So there was a ‘French connection’ there and by buying EMME, the owner of GSP, they increased their presence, particularly in Europe, in the retail market."
"So the combination of the two companies made a lot of sense. Avanquest was looking to increase its retail strength by combining with EMME across Europe and there was very little overlap – all it did was compliment the range rather than cannibalise it. GSP has always maintained that it’s the ‘one stop shop’ for software in the UK and now we can also offer utility and productivity categories to our existing range."
This appears to be a critical strategic move, as the deadlock between GSP and Focus in the educational, children’s and reference charts seems unlikely to shift in favour of one or the other any time soon. "In most software categories, GSP and Focus Multimedia tend to dominate the charts," says Brass. "Who is top tends to fluctuate from month to month, but over the whole year you can hardly put anything between us. This deal takes us one step further away from relying purely on the budget market."
Not that there’s anything wrong with the budget sector of course. One achievement Brass is particularly proud of is GSP’s recent gains in the budget games sector. One market we have quietly been making a big impact in is budget games," he says. "When I looked at the charts recently, we were the third biggest PC games publisher by units. We’ve signed some big players like Sega, Vivendi and Ubisoft."
In fact, so strong is GSP’s presence in the UK that the acquirer is adopting the acquiree’s name. "In the UK GSP is a stronger brand than Avanquest, so we’ve incorporated the Avanquest retail team into GSP," explains Brass. "My plan in the short term is to run two distinct labels. GSP will be education, reference, kids and games – primarily impulse purchase, family learning and that type of thing. The Avanquest label will be generally premium priced boxed products aimed very much at the home office and small business markets."
"I remain MD of GSP, but that now incorporates the Avanquest consumer product range. The way EMME worked, which will hopefully be continued with Avanquest, was that country managers were able to decide how to position their products within the market. So any time we release a new product we will be looking very carefully at the positioning, how it fits the market."
The Holy Grail for Brass now appears to be the premium-priced home office market. Success there would dwarf GSP’s achievements to date. "The home office market is dominated by companies like Adobe and Symantec and it’s an area we’re not playing in at present," says Brass. "However, you can have 50 per cent of the education market, but even one per cent of the antivirus market would just blow that away. So we can aim small by market share but still grow our business significantly."
One thing that won’t change is GSP’s retail-centric approach to its business. "Again, we would aim to utilise our strong ties with retail to develop this business," says Brass. "As well as offering products with great sell-through potential, we do a lot with point-of-sale: cardboard work, counter display units, spinners and so on. Spinners in particular are great for retail because they take up a relatively small amount of shelf space, but can hold up to 84 SKUs."
"We also work with retailers a lot on a promotional basis. We’ve recently done a lot of back-to-school work; we do an awful lot at Christmas, where we’ve put together special promotional gift packs. We’ve done newspaper promotions where we’ve incentivised people to go into a retailer to buy a product at a special price."
We finished by talking about the software market on the whole. Brass believes that the potential of the PC software market is often overlooked in the hunt for the next smash hit. Aside from the big sellers, there are thousands of products that collectively sell in great numbers. This phenomenon is sometimes referred to as ‘the long tail’ and is the basis of the commercial success of companies like Amazon.
"There’s a tendency in the industry to go for the charts and the latest and greatest console, but there’s a massive penetration of PCs out there and some very lucrative business," says Brass. "People are desperate to get PC software and the more that is made accessible to them the more people will buy. That’s proven by the fact that we’re now dealing with many of the supermarkets; that’s where we’re seeing our growing business. There’s always intense competition for shelf space and one trend we’re getting increasing support from ‘non-traditional’ retailers, who are showing greater interest in the PC side of things."
So, while this means there is more competition than ever, it is also a sign that the PC software market is still growing. "The market seems to be widening, particularly in the direction of family or casual gamers. Funnily enough, this has been assisted by the Nintendo DS, which has widened the popularity of technology and has awoken people to the potential of their PCs."
Brass concludes with a simple message for retailers looking to sell more software: "If retailers make these products readily available and easy to purchase, them people will buy them – it’s been proven."