Retail software

This article is about software sold to consumers through retail channels. For software used to operate retail businesses, see Point of sale and Back-office software.

Retail software, also called packaged software or shrinkwrap software, is commercial computer software sold to consumers and businesses as a ready-made product. It was traditionally distributed on physical storage media, such as floppy disks and CD-ROMs, in boxes sold through retail stores, and was licensed to the buyer under an end-user license agreement (EULA) rather than sold outright. Because these boxes were usually sealed in plastic shrink wrap, such products were sometimes called "shrinkware".

Since the 2000s, physical retail software has been largely replaced by digital distribution, in which software is downloaded from the publisher or an online store, and by subscription models such as software as a service (SaaS), in which software is accessed over the Internet for a recurring fee.

Distribution and licensing models

Retail software has been distributed and licensed in several ways:

• Boxed retail copies are sold to individual buyers through stores, typically with installation media, a printed manual, and a product key in the box.
• Original equipment manufacturer (OEM) copies are licensed by a software publisher to a computer manufacturer, which pre-installs the software on computers it sells. OEM copies are usually tied to the computer they ship with and are often cheaper than boxed copies.
• Volume licensing allows an organization to install a program on many computers under a single agreement, instead of buying a separate boxed copy for each machine.
• Digital downloads replace the physical box with a downloadable installer and a product key or online account, and are sold through publishers' websites or online stores.
• Subscriptions give users access to the software, including updates, for as long as they keep paying, and are often delivered partly or entirely through the Internet as software as a service.

Licenses for boxed software were often printed inside the package or displayed when the program was installed, and were said to be accepted when the buyer opened the package or used the software. In ProCD, Inc. v. Zeidenberg (1996), a United States federal appeals court held that such "shrinkwrap" licenses could be enforceable.

History

In 1976, Bill Gates of Microsoft published his "Open Letter to Hobbyists", which argued that hobbyists who copied Microsoft's Altair BASIC without paying were discouraging the development of good software. The letter is often cited as an early statement of the idea that software is a product to be paid for.

During the 1980s and 1990s, retail software made up most of the software used by consumers and small businesses. Prominent examples on the IBM PC and compatible computers included Lotus 1-2-3, WordPerfect, and the programs that became Microsoft Office. Operating systems such as Microsoft Windows were sold both in boxes and pre-installed on new computers.

The growth of the Internet changed the market. Users could obtain shareware, freeware, and free software online, and publishers increasingly sold software by download and offered online services. In 2011, Apple discontinued many of its boxed software products in favor of downloads from its Mac App Store. In 2013, Adobe stopped selling boxed copies of its Creative Suite and announced that future versions of its creative software would be offered only by subscription through Creative Cloud.

Video games were one of the last major categories of software still widely sold on physical media, but digital sales have also overtaken them. According to the market research firm Circana, spending on physical video games in the United States fell by more than half between 2021 and 2024 and was more than 85 percent below its 2008 peak.

See also

• Digital distribution
• Proprietary software
• Shrink wrap contract
• Software as a service
• Software license