It’s tempting to look at the U.S. software market from afar and see the opportunity – by any measure – as huge. With $175 billion spent on software in 2013 – license and subscription fees, installation and customization, maintenance – the U.S. accounted for 55% of worldwide spend. Yet, to their dismay and sometimes horror, offshore software companies often find the U.S. not nearly as big as they thought.
This is as true for SaaS companies as it is for servers-side offerings.
Why the paradox?
The answer: companies first see the scale of the opportunity, but overlook the scale of the competition. CEOs of offshore software companies will often brush aside the notion that any form of market evaluation and research is needed to enter the U.S. market. “It’s more than big enough for what we need”, is commonly heard.
That would be the case if software companies selling in the U.S. were either the same in number or proportion as the home market. Yet, the law of supply and demand works tirelessly to maintain equilibrium in every market for software products as it does for kitchen pots and pans.
Adding the phrase that in 2013 American companies bought $175 billion in software products and services from 110,000 sellers is more far-reaching than when the $175 billion figure stands magnificently on its own..
The opportunity in the U.S. market is more than big enough for a well-informed and well-executed entry strategy. But not for a a strategy based on whim or conjecture.