The software industry includes businesses for development, maintenance and

publication To publish is to make content available to the general public.Berne Convention, articl ...

software Software consists of computer programs that instruct the Execution (computing), execution of a computer. Software also includes design documents and specifications. The history of software is closely tied to the development of digital comput ...

that are using different

business model A business model describes how a Company, business organization creates, delivers, and captures value creation, value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-pub ...

s, mainly either "license/maintenance based" (on-premises) or " Cloud based" (such as SaaS, PaaS, IaaS, MBaaS, 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 managem ...

, 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 Burroughs ...

and

IBM International Business Machines Corporation (using the trademark IBM), nicknamed Big Blue, is an American Multinational corporation, multinational technology company headquartered in Armonk, New York, and present in over 175 countries. It is ...

. The

industry expanded in the early 1960s, shortly after computers became widely available. Demand for software was created by universities, the government, and businesses. Many of these programs were developed by full-time staff programmers in-house. Some were distributed free of charge among users of a particular machine. Others were done on a commercial basis, and other firms such as Computer Sciences Corporation (founded in 1959) started to grow. Other influential or typical software companies begun in the early 1960s included Advanced Computer Techniques, Automatic Data Processing, Applied Data Research, and Informatics General. The computer/ hardware makers started bundling operating systems, 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 until ...

(DEC) brought a relatively low-priced microcomputer 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, commonly referred to as PC or computer, is a computer designed for individual use. It is typically used for tasks such as Word processor, word processing, web browser, internet browsing, email, multimedia playback, and PC ...

("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,

Microsoft Microsoft Corporation is an American multinational corporation and technology company, technology conglomerate headquartered in Redmond, Washington. Founded in 1975, the company became influential in the History of personal computers#The ear ...

's first

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

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 computer software, software that grants its creator, publisher, or other rightsholder or rightsholder partner a legal monopoly by modern copyright and intellectual property law to exclude the recipient from freely sharing t ...

, SaaS reduces the concerns about unauthorized copying, since it can only be accessed through the Web, and by definition no client software is loaded onto the end user's PC.

Size of the industry

Market research firm Gartner estimates the global market for IT spending in 2024 at $3.73 trillion. If telecoms services are included, this will rise to $5.26 trillion. Major companies include Microsoft, HP,

Oracle An oracle is a person or thing considered to provide insight, wise counsel or prophetic predictions, most notably including precognition of the future, inspired by deities. If done through occultic means, it is a form of divination. Descript ...

Dell Dell Inc. is an American technology company that develops, sells, repairs, and supports personal computers (PCs), Server (computing), servers, data storage devices, network switches, software, computer peripherals including printers and webcam ...

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 a company, business organization, or one of their operating units is transferred to or consolidated with another entity. They may happen through direct absorpt ...

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 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

Software industry business models include SaaS (subscription-based), PaaS (platform services), IaaS (infrastructure services), and freemium (free with premium features). Others are perpetual licenses (one-time fee), ad-supported (free with ads), open source (free with paid support), pay-per-use (usage-based), and consulting/customization services. Hybrid models combine multiple approaches. 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 effects in software ecosystems, networks of companies, and their customers are an important element in the strategy of software companies.

References

External links