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Vertical market software is software developed for niche industry or applications, or for a unique clientele. This is different from horizontal market software, which can serve a wide range of industries. Vertical market software is often developed and customized to serve the needs of a specific business or industry such as manufacturing, insurance or banking.
Vertical market software addresses the requirements of a specific industry or business within an identified and discernible vertical market. However, horizontal market software targets different industry verticals, and as such the products developed are generic to cater to wide range of users. Word processors and spreadsheet applications are some common examples for horizontal market software, as these applications are used by many consumers, students and businesses. Vertical market software provides customers with better tailored solutions that could potentially help them to grow or establish their market share. As vertical market software area is homogenous, faster growth is sometimes possible and higher overall market penetration is also achievable. Point-of-sale software is one common example of vertical market software. Other examples of vertical market software include applications for scientific analysis, medical needs and manufacturing.
There are some distinct benefits associated with vertical market software. Vertical market software helps to better address industry specific processes and functionalities. It also helps businesses in getting a better integration with different functionalities and processes compared to horizontal market software. Proper use of vertical market share helps in greater organization and better use of resources involved. Although there is less competition in vertical markets, it is considered a risky industry since the designers and developers involved are highly dependent on the specific players and clients to purchase their products.