Non-gaming software sales in the United States declined 2 percent to $2.9 billion, according to The NPD Group.
The drop was primarily attributed to a fall off in sales of operating systems and finance software, while these were somewhat offset by increases in business and system utility software. The latter two rose by 10 percent and 3 percent, respectively.
"The steep decline in retail operating system sales in 2006 was due primarily to the fact that most consumers that needed to upgrade older desktops and laptops to Microsoft XP have already done so," said Chris Swenson, NPD's software industry analysis director.
Swenson expects the release of Microsoft Vista on Jan. 30 to significantly alter the software retail landscape in 2007 and help boost dollars sales for the year.
Security suite software was the big winner in 2006, posting a 19 percent increase in dollar sales, while finance software sales declined for the first time since 2000. Swenson pointed to falling sales of tax preparation software as the main culprit as consumers have chosen to use online services offered by the major tax preparation companies.
2006 Top 10 PC Software Titles
Sold in U.S. Retail channel, Ranked by Total Dollar Sales