Krunal at 18:38, 10 February 2023

2023-02-10T18:38:40Z

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{{Short description|Class of businesses specializing in the development, maintenance and publication of software}}
{{Multiple issues|
{{globalize}}
{{more citations needed}}
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The '''software industry''' includes businesses for [[software development|development]], [[software maintenance|maintenance]] and [[software publisher|publication]] of [[software]] that are using different [[business model]]s, mainly either "license/maintenance based" (on-premises) or "[[Cloud computing|Cloud]] based" (such as [[SaaS]], [[PaaS]], [[IaaS]], MBaaS, MSaaS, DCaaS etc.). The industry also includes [[software service]]s, such as [[training]], [[software documentation|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.<ref>{{cite web |title=The Pharmaceutical Industry in Figures Key Data 2021 |url=https://www.efpia.eu/media/602709/the-pharmaceutical-industry-in-figures-2021.pdf |publisher=European Federation of Pharmaceutical Industries and Associations |access-date=28 June 2022}}</ref>

==History==
The first company founded to provide software products and services was [[Computer Usage Company]] in 1955.<ref>{{cite journal |title= Recollections of the first software company |first= Elmer C. |last= Kubie |journal= [[Annals of the History of Computing]] |volume= 16 |issue= 2 |publisher= [[IEEE Computer Society]] |pages= 65–71 |doi= 10.1109/85.279238 |s2cid= 5733812 }}</ref> 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, 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]] (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]].<ref>{{cite book | title=From Airline Reservations to Sonic the Hedgehog: A History of the Software Industry | url=https://archive.org/details/fromairlinereser00mart_0 | url-access=registration | first=Martin | last=Campbell-Kelly | author-link=Martin Campbell-Kelly | publisher=MIT Press | location=Cambridge, Massachusetts | year=2003 | page=[https://archive.org/details/fromairlinereser00mart_0/page/57 57]}}</ref><ref>{{cite book | title=The Computer Establishment | first=Katharine Davis | last=Fishman | publisher= McGraw-Hill Book Company | location=New York | year=1981 | type=paperback 1982 | page=268}}</ref> The computer/[[Computer hardware|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 [[Software copyright|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==
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 Inc.|HP]], [[Oracle Corporation|Oracle]], [[Dell]] and IBM.<ref>{{cite news|title=Software Products Global Market Report 2021: COVID-19 Impact and Recovery to 2030
|url=https://www.businesswire.com/news/home/20210909006012/en/Software-Products-Global-Market-Report-2021-COVID-19-Impact-and-Recovery-to-2030|website=ResearchAndMarkets.com|access-date=June 28, 2022}}</ref>

==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]] have been announced with a total known value of US$1,166 billion.<ref>{{Cite news|url=https://imaa-institute.org/m-and-a-by-industries/|title=M&A by Industries - Institute for Mergers, Acquisitions and Alliances (IMAA)|work=Institute for Mergers, Acquisitions and Alliances (IMAA)|access-date=2018-02-28|language=en-US}}</ref> 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.<ref>{{cite book |last=Popp |first=Karl Michael |title=Mergers and Acquisitions in the Software Industry - foundations of due diligence |year=2013 |publisher=Books on demand |location=Norderstedt |isbn=978-3-7322-4381-5 |url=http://mergerduediligence.com/ }}</ref>

==Business models within the software industry==
Business models of software companies have been widely discussed.<ref name="Karl2010">{{cite book
| title = Profit from Software Ecosystems: Business Models, Ecosystems and Partnerships in the Software Industry
| year = 2010
| publisher = BOD
| location = Norderstedt, Germany
| isbn = 978-3-8391-6983-4
| author = Karl M. Popp and Ralf Meyer}}</ref><ref name="cusumano">Cusumano M. (2003) Finding Your balance in the Products and Service Debate, Communications of the ACM. Vol. 46:3</ref> [[Network effect]]s in [[software ecosystem]]s, networks of companies, and their customers are an important element in the strategy of software companies.<ref>{{cite book
| title = Software Ecosystem: Understanding an Indispensable Technology and Industry
| year = 2003
| publisher = MIT Press
| location = Cambridge, MA, USA
| isbn = 0-262-13432-2
| author9 = David G. Messerschmitt and Clemens Szyperski}}</ref>

==See also==
* [[Software engineering]]
* [[World's largest software companies]]
* [[Function point]]
* [[Software development effort estimation]]
* [[Comparison of development estimation software]]

== References ==
{{Reflist}}

==External links==

* {{cite web
|url = https://www.gnu.org/philosophy/words-to-avoid.en.html#SoftwareIndustry
|title = Software Industry
|work = Words to Avoid (or Use with Care) Because They Are Loaded or Confusing
|publisher = [[Free Software Foundation]]
|date = 2012-11-20
|access-date = 2013-01-31
}}

{{Industries}}

[[Category:Software industry| ]]
[[Category:Industries (economics)]]
[[Category:Information economy]]

Software industry - Revision history

Krunal at 18:38, 10 February 2023