The software industry includes businesses for development,

maintenance Maintenance may refer to: Biological science * Maintenance of an organism * Maintenance respiration Non-technical maintenance * Alimony, also called ''maintenance'' in British English * Champerty and maintenance, two related legal doct ...

and

publication To publish is to make content available to the general public.Berne Conve ...

software Software is a set of computer programs and associated documentation and data. This is in contrast to hardware, from which the system is built and which actually performs the work. At the lowest programming level, executable code consist ...

that are using different

business model A business model describes how an organization creates, delivers, and captures value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-published, 2010 in economic, soci ...

s, mainly either "license/maintenance based" (on-premises) or "

Cloud In meteorology, a cloud is an aerosol consisting of a visible mass of miniature liquid droplets, frozen crystals, or other particles suspended in the atmosphere of a planetary body or similar space. Water or various other chemicals may ...

based" (such as

SaaS Software as a service (SaaS ) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. SaaS is also known as "on-demand software" and Web-based/Web-hosted software. SaaS is co ...

, PaaS,

IaaS The first major provider of infrastructure as a service (IaaS) was Amazon in 2008. IaaS is a cloud computing service model by means of which computing resources are supplied by a cloud services provider. The IaaS vendor provides the storage, net ...

MBaaS Mobile backend as a service (MBaaS), also known as "backend as a service", is a model for providing web app and mobile app developers with a way to link their applications to Front and back ends, backend cloud storage and APIs exposed by back end ...

, MSaaS, DCaaS etc.). The industry also includes software services, such as

training Training is teaching, or developing in oneself or others, any skills and knowledge or fitness that relate to specific useful competencies. Training has specific goals of improving one's capability, capacity, productivity and performance. I ...

documentation Documentation is any communicable material that is used to describe, explain or instruct regarding some attributes of an object, system or procedure, such as its parts, assembly, installation, maintenance and use. As a form of knowledge manageme ...

, consulting and data recovery. The software and computer services industry spends more than 11% of its net sales for Research & Development which is in comparison with other industries the second highest share after pharmaceuticals & biotechnology.

History

The first company founded to provide software products and services was Computer Usage Company in 1955. Before that time, computers were programmed either by customers, or the few commercial computer vendors of the time, such as

Sperry Rand Sperry Corporation was a major American equipment and electronics company whose existence spanned more than seven decades of the 20th century. Sperry ceased to exist in 1986 following a prolonged hostile takeover bid engineered by Burroug ...

and IBM. The

industry expanded in the early 1960s, almost immediately after computers were first sold in mass-produced quantities. Universities, government, and business customers created a demand for software. Many of these programs were written in-house by full-time staff programmers. Some were distributed freely between users of a particular machine for no charge. Others were done on a commercial basis, and other firms such as

Computer Sciences Corporation Computer Sciences Corporation (CSC) was an American multinational corporation that provided information technology (IT) services and professional services. On April 3, 2017, it merged with the Enterprise Services line of business of HP Ente ...

(founded in 1959) started to grow. Other influential or typical software companies begun in the early 1960s included

Advanced Computer Techniques Advanced Computer Techniques (ACT) was a computer software company most active from the early 1960s through the early 1990s that made software products, especially language compilers and related tools. It also engaged in information technology co ...

, Automatic Data Processing, Applied Data Research, and Informatics General. The computer/ hardware makers started bundling

operating systems An operating system (OS) is system software that manages computer hardware, software resources, and provides common services for computer programs. Time-sharing operating systems schedule tasks for efficient use of the system and may also in ...

, systems software and programming environments with their machines. When

Digital Equipment Corporation Digital Equipment Corporation (DEC ), using the trademark Digital, was a major American company in the computer industry from the 1960s to the 1990s. The company was co-founded by Ken Olsen and Harlan Anderson in 1957. Olsen was president un ...

(DEC) brought a relatively low-priced

microcomputer A microcomputer is a small, relatively inexpensive computer having a central processing unit (CPU) made out of a microprocessor. The computer also includes memory and input/output (I/O) circuitry together mounted on a printed circuit board (PC ...

to market, it brought computing within the reach of many more companies and universities worldwide, and it spawned great innovation in terms of new, powerful programming languages and methodologies. New software was built for microcomputers, so other manufacturers including IBM, followed DEC's example quickly, resulting in the IBM AS/400 amongst others. The industry expanded greatly with the rise of the

personal computer A personal computer (PC) is a multi-purpose microcomputer whose size, capabilities, and price make it feasible for individual use. Personal computers are intended to be operated directly by an end user, rather than by a computer expert or te ...

("PC") in the mid-1970s, which brought desktop computing to the office worker for the first time. In the following years, it also created a growing market for games, applications, and utilities.

DOS DOS is shorthand for the MS-DOS and IBM PC DOS family of operating systems. DOS may also refer to: Computing * Data over signalling (DoS), multiplexing data onto a signalling channel * Denial-of-service attack (DoS), an attack on a communicat ...

Microsoft Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washi ...

's first

operating system An operating system (OS) is system software that manages computer hardware, software resources, and provides common daemon (computing), services for computer programs. Time-sharing operating systems scheduler (computing), schedule tasks for ef ...

product, was the dominant operating system at the time. In the early years of the 21st century, another successful

has arisen for hosted software, called software-as-a-service, or SaaS; this was at least the third time this model had been attempted. From the point of view of producers of some

proprietary software Proprietary software is software that is deemed within the free and open-source software to be non-free because its creator, publisher, or other rightsholder or rightsholder partner exercises a legal monopoly afforded by modern copyright and i ...

, SaaS reduces the concerns about

unauthorized copying Copyright infringement (at times referred to as piracy) is the use of works protected by copyright without permission for a usage where such permission is required, thereby infringing certain exclusive rights granted to the copyright holder, su ...

, since it can only be accessed through the Web, and by definition no

client software In computing, a client is a piece of computer hardware or software that accesses a service made available by a server as part of the client–server model of computer networks. The server is often (but not always) on another computer system, ...

is loaded onto the end user's PC.

Size of the industry

The global software products market amounts to US$968.25 billion in 2021 and had a compound annual growth rate (CAGR) of 4%. Major companies include Microsoft, HP,

Oracle An oracle is a person or agency considered to provide wise and insightful counsel or prophetic predictions, most notably including precognition of the future, inspired by deities. As such, it is a form of divination. Description The word ...

Dell Dell is an American based technology company. It develops, sells, repairs, and supports computers and related products and services. Dell is owned by its parent company, Dell Technologies. Dell sells personal computers (PCs), servers, data ...

and IBM.

Mergers and acquisitions

The software industry has been subject to a high degree of consolidation over the past couple of decades. Between 1995 and 2018 around 37,039

mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspec ...

have been announced with a total known value of US$1,166 billion. The highest number and value of deals was set in 2000 during the high times of the

dot-com bubble The dot-com bubble (dot-com boom, tech bubble, or the Internet bubble) was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet. Between 1995 and its peak in March 2000, the Nasdaq Comp ...

with 2,674 transactions valued at US$105 billion. In 2017, 2,547 deals were announced valued at US$111 billion. Approaches to successfully acquire and integrate software companies are available.

Business models within the software industry

Business models of software companies have been widely discussed.Cusumano M. (2003) Finding Your balance in the Products and Service Debate, Communications of the ACM. Vol. 46:3

Network effect In economics, a network effect (also called network externality or demand-side economies of scale) is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. Net ...

s in software ecosystems, networks of companies, and their customers are an important element in the strategy of software companies.

References

External links