Software industry

Class of businesses specializing in software

This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these messages)

The examples and perspective in this article may not represent a worldwide view of the subject. You may improve this article, discuss the issue on the talk page, or create a new article, as appropriate. (December 2010) (Learn how and when to remove this message)

|

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed.
Find sources: "Software industry" – news · newspapers · books · scholar · JSTOR (June 2012) (Learn how and when to remove this message)

|

This article needs to be updated. Please help update this article to reflect recent events or newly available information. (July 2024)

|

(Learn how and when to remove this message)

The software industry includes businesses for development, maintenance and publication of software that are using different business models, 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, documentation, 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.[1]

## History

[edit]

The first company founded to provide software products and services was Computer Usage Company in 1955.[2] Before that time, computers were programmed either by customers, or the few commercial computer vendors of the time, such as Sperry Rand and IBM.

The software 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.[3][4] The computer/hardware makers started bundling operating systems, systems software and programming environments with their machines.

When Digital Equipment Corporation (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 ("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's first operating system product, was the dominant operating system at the time.

In the early years of the 21st century, another successful business model has arisen for hosted software, called software-as-a-service, or SaaS; this was at least the third time[citation needed] this model had been attempted. From the point of view of producers of some proprietary software, 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

[edit]

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.[5] Major companies include Microsoft, HP, Oracle, Dell and IBM.[6]

## Mergers and acquisitions

[edit]

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 have been announced with a total known value of US$1,166 billion.[7] 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.[8]

## Business models within the software industry

[edit]

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.[9][10] Network effects in software ecosystems, networks of companies, and their customers are an important element in the strategy of software companies.[11]

## See also

[edit]

* Software engineering
* World's largest software companies
* Function point
* Software development effort estimation
* Comparison of development estimation software

## References

[edit]

1. ^ "The Pharmaceutical Industry in Figures Key Data 2021" (PDF). European Federation of Pharmaceutical Industries and Associations. Retrieved 28 June 2022.
2. ^ Kubie, Elmer C. (Summer 1994). "Recollections of the first software company". Annals of the History of Computing. 16 (2). IEEE Computer Society: 65–71\. doi:10.1109/85.279238. S2CID 5733812.
3. ^ Campbell-Kelly, Martin (2003). From Airline Reservations to Sonic the Hedgehog: A History of the Software Industry. Cambridge, Massachusetts: MIT Press. p. 57. ISBN 978-0-262-03303-9.
4. ^ Fishman, Katharine Davis (1981). The Computer Establishment (paperback 1982). New York: McGraw-Hill Book Company. p. 268.
5. ^ "Gartner Forecasts Worldwide IT Spending to Grow 7.5% in 2024". Gartner. 2024-07-16. Retrieved 2024-12-14.
6. ^ "Software Products Global Market Report 2021: COVID-19 Impact and Recovery to 2030". ResearchAndMarkets.com. September 9, 2021. Retrieved June 28, 2022.
7. ^ "M&A by Industries - Institute for Mergers, Acquisitions and Alliances (IMAA)". Institute for Mergers, Acquisitions and Alliances (IMAA). Retrieved 2018-02-28.
8. ^ Popp, Karl Michael (2013). Mergers and Acquisitions in the Software Industry - foundations of due diligence. Norderstedt: Books on demand. ISBN 978-3-7322-4381-5.
9. ^ Karl M. Popp and Ralf Meyer (2010). Profit from Software Ecosystems: Business Models, Ecosystems and Partnerships in the Software Industry. Norderstedt, Germany: BOD. ISBN 978-3-8391-6983-4.
10. ^ Cusumano M. (2003) Finding Your balance in the Products and Service Debate, Communications of the ACM. Vol. 46:3
11. ^ Software Ecosystem: Understanding an Indispensable Technology and Industry. Cambridge, MA: MIT Press. 2003. ISBN 0-262-13432-2.

## External links

[edit]

Look up software industry in Wiktionary, the free dictionary.

* Sektörler ve Endüstriler

* "Software Industry". Words to Avoid (or Use with Care) Because They Are Loaded or Confusing. Free Software Foundation. 2012-11-20. Retrieved 2013-01-31.

* v
* t
* e

Major industries by economic sector

Primary sector or ′Natural sector′ (raw materials)

| Biotic|

| Agriculture|

* Arable farming
* Cereals
* Legumes
* Vegetables
* Fiber crops
* Oilseeds
* Sugar
* Tobacco
* Permanent crops
* Apples et al.
* Berries
* Citrus
* Stone fruits
* Tropical fruit
* Viticulture
* Cocoa
* Coffee
* Tea
* Nuts
* Olives
* Medicinal plants
* Spices
* Horticulture
* Flowers
* Seeds
* Animal husbandry
* Beef cattle
* Dairy farming
* Fur farming
* Horses
* Other livestock
* Pig
* Wool
* Poultry
* Beekeeping
* Cochineal
* Shellac
* Silk
* Hunting
* Fur trapping

|

Forestry|

* Silviculture
* Bamboo
* Logging
* Firewood
* Rattan
* Tree tapping
* Frankincense
* Gum arabic
* Gutta-percha
* Maple syrup
* Mastic
* Natural rubber
* Palm sugar, syrup, & wine
* Pine resin
* Wild mushrooms
* Fungiculture
* Truffles

Aquatic|

* Fishing
* Anchovies
* Herring
* Sardines
* Cod
* Haddock
* Pollock
* Mackerel
* Shark
* Swordfish
* Tuna
* Crabs
* Lobsters
* Sea urchins
* Squid
* Whaling
* Aquaculture
* Carp
* Catfish
* Tilapia
* Abalone
* Mussels
* Oysters
* Pearls
* Microalgae
* Seaweed
* Both
* Clams
* Sea cucumbers
* Scallops
* Salmon
* Shrimp

Geological|

* Fossil fuels
* Coal
* Peat
* Natural gas
* Oil shale
* Petroleum
* Tar sands
* Mining of ores
* Aluminum
* Copper
* Iron
* Gold
* Silver
* Palladium
* Platinum
* Lithium
* Rare-earth metals
* Uranium
* Other minerals
* Gemstones
* Phosphorus
* Potash
* Salt
* Sulfur
* Quarrying
* Gravel
* Sand
* Chalk
* Clay
* Gypsum
* Limestone
* Dimension stone
* Granite
* Marble

Secondary sector or ′Industrial sector′ (goods manufacturing)

| Manufacturing|

| Light industry|

* Food
* Animal feed
* Baking
* Canning
* Dairy products
* Flour
* Meat
* Prepared
* Preserved
* Sweets
* Vegetable oils
* Beverages
* Beer
* Bottled water
* Liquor
* Soft drinks
* Wine
* Textiles
* Carding
* Dyeing
* Prints
* Spinning
* Weaving
* Carpets
* Lace
* Linens
* Rope
* Clothing
* Accessories
* Dressmaking
* Furs
* Hatmaking
* Sewing
* Shoemaking
* Tailoring
* Printing
* Bookbinding
* Embossing
* Engraving
* Secure
* Typesetting
* Media reproduction
* Cassette tapes
* Phonographs
* Optical discs
* Metal fabrication
* Boilermaking
* Builders' & household hardware
* Cutlery
* Gunsmithing
* Locksmithing
* Machining
* Other smithing
* Powder metallurgy
* Prefabrication
* Surface finishing
* Other fabrication
* 3D printing
* Blow molding
* Drawing
* Extrusion
* Glassblowing
* Injection moulding
* Pottery
* Sintering
* Stonemasonry
* Woodworking
* Furniture
* Other goods
* Baggage
* Bicycles
* Jewellery
* Medical supplies
* Musical instruments
* Office supplies
* Outdoors & sports equipment
* Personal protective equipment
* Toys

|

Electrical
& optical|

* Electronics
* Components
* Circuit boards
* Semiconductors
* Computers
* Computer systems
* Parts & peripherals
* Blank storage media
* Communications equipment
* Mobile phones
* Network infrastructure
* Consumer electronics
* Televisions
* Video game consoles
* Instrumentation
* Clocks and watches
* GPS devices
* Scientific instruments
* Medical imaging systems
* Optical instruments
* Cameras
* Gun & spotting scopes
* Laser construction
* Lens grinding
* Microscopes
* Telescopes
* Electrical equipment
* Batteries
* Electrical & fiber optic cables
* Electric lighting
* Electric motors
* Home appliances
* Transformers

Chemicals|

* Coal & oil refining
* Bitumen
* Coke
* Diesel fuel
* Fuel oil
* Gasoline
* Jet fuel
* Kerosene
* Mineral oil
* Paraffin wax
* Petrochemicals
* Petroleum jelly
* Propane
* Synthetic oil
* Tar
* Commodity chemicals
* Fertilizers
* Industrial gases
* Pigments
* Pure elements
* Speciality chemicals
* Adhesives
* Agrochemicals
* Aroma compounds
* Cleaning products
* Cosmetics
* Explosives
* Fireworks
* Paints & inks
* Perfumes
* Soap
* Toiletries
* Fine chemicals
* Pharmaceuticals
* Antibiotics
* Blood products
* Chemical & hormonal contraceptives
* Generic drugs
* Illegal drugs
* Supplements
* Vaccines

Materials|

* Leather
* Liming & deliming
* Tanning
* Currying & oiling
* Wood
* Drying
* Sawmilling
* Engineered
* Lumber
* Composite
* Paper
* Sizing
* Cardboard
* Pulp
* Tissue
* Rubber
* Tires
* Vulcanized rubber
* Plastics
* Commodity
* Engineered
* Specialty
* Pellets
* Synthetic fibers
* Thermoplastics & thermosets
* Glass
* Borosilicate
* Fused quartz
* Soda-lime
* Float glass
* Glass fiber
* Glass wool & fiberglass
* Safety glass
* Ceramics
* Brick
* Earthenware
* Porcelain
* Refractory
* Tile
* Cement
* Mortar
* Plaster
* Ready-mix concrete
* Other mineral
* Abrasives
* Carbon fibers & advanced materials
* Mineral wool
* Synthetic gems
* Metal refining
* Iron
* Aluminum
* Copper
* Alloys
* Steel
* Formed metal
* Rolled
* Forged
* Cast metal

Heavy industry|

* Machinery
* Conveyors
* Heavy
* Hydraulic
* Machine tools
* Power & wind turbines
* Automobiles
* Other heavy vehicles
* Aerospace & space
* Rail vehicles
* Ships & offshore platforms
* Weapons

Utilities|

* Power
* Electric
* Gas distribution
* Renewable
* Water
* Sewage
* Waste management
* Collection
* Dumping
* Hazardous
* Recycling
* Remediation
* Telecom networks
* Cable TV
* Internet
* Mobile
* Satellite
* Telephone

Construction|

* Buildings
* Commercial
* Industrial
* Residential
* Civil engineering
* Bridges
* Railways
* Roads
* Tunnels
* Canals
* Dams
* Dredging
* Harbors
* Specialty trades
* Cabinetry
* Demolition
* Electrical wiring
* Elevators
* HVAC
* Painting and decorating
* Plumbing
* Site preparation

Tertiary sector or ′Service sector′ (services)

| Sales|

* Retail
* Car dealership
* Consumer goods
* General store
* Grocery store
* Department store
* Mail order
* Online shopping
* Specialty store
* Wholesale
* Auction
* Brokerage
* Distribution

|

Transport
& Storage|

* Cargo
* Air cargo
* Intermodal
* Mail
* Moving company
* Rail
* Trucking
* Passenger transport
* Airlines
* Car rentals
* Passenger rail
* Ridesharing
* Taxis
* Warehousing
* Self storage

Hospitality|

* Foodservice
* Drink service
* Cafés
* Catering
* Fast food
* Food delivery
* Restaurants
* Teahouses
* Hotels

Asset management|

* Financial services
* Banking
* Credit
* Financial advice
* Holding company
* Money transfer
* Payment cards
* Risk management
* Securities
* Insurance
* Health
* Life
* Pension funding
* Property
* Reinsurance
* Real estate
* Brokerage
* Property management

Professional|

* Accounting
* Assurance
* Audit
* Bookkeeping
* Tax advice
* Architecture & engineering
* Inspection
* Surveying
* Physical, product, & system testing
* Design
* Fashion
* Interior
* Product
* Legal services
* Management
* Consulting
* Public relations
* Marketing
* Advertising
* Creative
* Language
* Research and development
* Basic research

Healthcare|

* Medicine
* Dentist offices
* Hospitals
* Nursing
* Residential care
* Veterinary medicine

Entertainment
& leisure|

* Audio-visual
* Film
* Music
* Video games
* Broadcasting
* News
* Radio
* Television
* Sport
* Travel
* Business travel
* Cruise lines
* Tourism
* Gambling
* Online
* Venues
* Arcades
* Amusement parks
* Fairgrounds
* Nightclubs
* Tabletop games

Publishing
& Mass media|

* Written
* Books
* Periodicals
* Software
* Internet
* Hosting
* Social networks
* Streaming
* Websites

Education|

* Primary
* Secondary
* Tertiary
* Vocational school
* University
* Testing
* Tutoring

Other|

* Administrative
* Customer service
* Leasing
* Renting
* Staffing
* Private investigation & security
* Maintenance
* Janitors
* Landscaping
* Repairs
* Personal services
* Beauty
* Dry cleaning
* Funeral
* Maid service
* Pet care
* Sex
* Poverty

Related

| Classification
standards|

* Production-based
* ANZSIC
* ISIC
* NACE
* NAICS
* SIC
* UKSIC
* Market-based
* GICS
* ICB
* TRBC
* Other
* Aftermarket
* Generic
* OEM

|

Inputs
& outputs|

* Externalities
* Community
* Crime
* Culture
* Pollution
* Well-being
* Funding
* Goods
* Commodities
* Final
* Intermediate
* Raw material
* Innovation
* Primary inputs
* Labor
* Natural resources
* Physical capital
* Services
* Technology

Organization|

* Centralization
* Cartel
* Conglomerate
* Horizontal integration
* Mergers and acquisitions
* Monopoly
* Monopsony
* Vertical integration
* Decentralization
* Enforced breakup
* Freelancing
* Homesteading
* Outsourcing
* Putting-out system
* Spinning-off
* Temporary work
* Ownership
* Cooperative
* Joint-stock company
* Nationalization
* Nonprofit organization
* Partnership
* Privatization
* Sole proprietorship
* State-owned enterprise

* Category
* Commons
* Outline

Authority control databases

National|

* United States
* Japan
* Czech Republic
* Israel

Other|

* Yale LUX

*[v]: View this template
*[t]: Discuss this template
*[e]: Edit this template