Software industry

2013-01-31T17:15:46Z

117.220.67.185: /* Leading companies: mindshare and marketshare */

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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 any business model. The industry also includes software [[Service (economics)|service]]s, such as [[training]], [[software documentation|documentation]], and [[consultancy|consulting]].

==History==
The word "software" had been coined as a prank by at least 1953, but did not appear in print until the 1960s.<ref>{{cite web |author= Paul Niquette |title= Softword: Provenance for the Word 'Software' |year= 1995 |url= http://www.niquette.com/books/softword/tocsoft.html }} adapted from ''Sophisticated: The Magazine'' ISBN 1-58922-233-4</ref> Before this time, computers were programmed either by customers, or the few commercial computer vendors of the time, such as [[UNIVAC]] and [[IBM]]. 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 |author= Elmer C. Kubie |journal= IEEE Annals of the History of Computing |work= Annals of the History of Computing |volume= 16 |issue= 2 |publisher= IEEE Computer Society |date= Summer 1994 |pages= 65–71 |doi= 10.1109/85.279238 }}</ref>

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. 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 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 computing to the [[desk]]top of the office worker. In subsequent 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{{fact|date=July 2012}} 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.

== Software sectors ==
There are several types of businesses in the software industry.<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 = 3-8391-6983-6
| author = Karl M. Popp and Ralf Meyer}}</ref> Infrastructure software, including [[operating system]]s, [[middleware]], and [[database]]s, is made by companies and organisations such as [[Microsoft]], [[Google]], [[IBM]], [[SAP AG]], [[EMC Corporation|EMC]] and [[Oracle Corporation|Oracle]]. [[Enterprise software]], the software that automates business processes in finance, production, logistics, sales and marketing, is made by [[Oracle Corporation|Oracle]], [[SAP AG]], [[Sage SA|Sage]] and [[Infor]]. [[Security software]] is made by the likes of [[Symantec]], [[Trend Micro]] and [[Kaspersky]]. Several industry-specific software makers are also among the largest software companies in the world: IBM and [[CA Technologies]] for [[IBM mainframe]] environments; [[SunGard]], making software for banks, [[BlackBoard]] making software for schools, and companies like [[Qualcomm]] or [[CyberVision]] making software for telecom companies.

== Leading companies: mindshare and marketshare ==
{{unreferenced-section|date=July 2012}}
In terms of technology leadership, the software industry has long been led by IBM. However, Microsoft became the dominant PC operating system supplier. Other companies that had substantial mindshare (not marketshare) in the software industry are Sun Microsystems, the developer of the [[Java (software platform)|Java platform]] (purchased by Oracle in 2009). However in terms of revenues coming from software sales, the software industry is clearly dominated by Microsoft, since inception. Microsoft products are still sold in largest number across the globe.
But now Apple and Google have gone bigger than Microsoft in terms of Market Capital. With Apple's Market Cap at around $100 Billion and Google's at around $57 Billion, Microsoft is third at $50 Billion.

== Size of the industry ==
According to market researcher DataMonitor, the size of the worldwide software industry in 2008 was US$303.8 billion, an increase of 6.5% compared to 2007. Americas{{huh|date=July 2012}} account for 42.6% of the global software market's value.<ref>[http://www.datamonitor.com/store/Default.aspx DataMonitor - Abstract from Global Software Industry Guide - 2008]{{Dead link|This links to the research store's homepage|date=May 2012}}</ref>

== Mergers and acquisitions ==
The software industry has been subject to a high degree of consolidation over the past couple of decades. From 1988 to 2010, 41,136 [[mergers and acquisitions]] have been announced with a total known value of US$1,451 billion.<ref>http://www.imaa-institute.org/statistics-mergers-acquisitions.html#M&A_Ind_Software</ref> The highest number and value of deals was set in 2000 during the high times of the [[dot-com bubble]] with 6,757 transactions valued at $447 billion. In 2010, 1,628 deals were announced valued at $49 billion.

== Business models the software industry ==

Business models of software companies have been widely discussed.<ref name="Karl2010" /><ref name="cusumano">Cusumano M. (2003) Finding Your balance in the Products and Service Debate, Communications of the ACM. Vol. 46:3</ref> Network effects 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>

== Evaluating software vendors ==

When an organization is looking for software vendors, the following things can be considered.
# Core competency of the vendor - For example, when an organization is looking for ERP implementation vendors it would certainly be beneficial to go for vendors who specialize in these projects. However, giant IT companies could be an exception as they specialize in multiple technologies.
# Number of years in business - This helps organization understand the credibility of the business.
# Stock market listing - Important if the size if the project is huge as a listed software vendor is more likely to have better governance processes
# Overall and available vendor headcount - This can help organizations to decide how their resources requirements can be met by the software vendor.
# Vendor credentials - The software vendor's prior experience in similar projects can increase the confidence of the organization
# Industry Certifications/awards/Alliance partners - Industry recognition is another parameter for evaluating the software vendors
# Local and global offices - While local office is important for any meetings, follow ups etc. global offices show the reach of the vendor
# Project management/tracking processes - More robust the processes are, better will be quality of the software product
# Lead times to start development - The vendor might have a lot of projects on hand already and it is important for an organization to know the lead times
# Core solution and solution options - The software vendor should be made to make a presentation to showcase vendor's understanding of the requirements
# Development time and costs - The estimates for efforts, resources, schedule and costs (includes fees and expenses)
# Non functional requirements - The vendor's ability to meet non functional requirements
# Warranty support agreements - For post production break fixes
# Post go live - Maintenance activities support costs

These are just some of the typical parameters used for evaluating the software vendors for different projects.
Depending on the specific project requirements, an organization can add/modify the parameters.

== See also ==
* [[Software]]
* [[Software development]]
* [[Software publisher]]
* [[Software engineering]]
* [[World's largest software companies]]

== References ==
{{Reflist}}

== External links ==
{{Wiktionary}}
* [http://www.siia.net/ Software and Information Industry Association website]
* [http://www.softwareceo.com/ SoftwareCEO] the largest online community of software executives in the world
* [http://www.siprofessionals.org/ Software Industry Professionals website]
* [http://www.sao.org/ Software Association of Oregon website]
* {{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
|accessdate = 2013-01-31
}}

{{Industries}}

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[[Category:Software industry|*]]
[[Category:Industries]]

[[ar:صناعة البرمجيات]]
[[bn:সফটওয়্যার কোম্পানি]]
[[bg:Софтуерна индустрия]]
[[de:Software-Industrie]]
[[es:Industria del software]]
[[eu:Software fabrika]]
[[hr:Softverska tvrtka]]
[[it:Industria del software]]
[[kk:Программалық жасақтама өнеркәсібі]]
[[ky:Программдык жабдуу индустриясы]]
[[no:Programvareselskap]]
[[pt:Indústria de software]]
[[ru:Индустрия программного обеспечения]]
[[si:මෘදුකාංග කර්මාන්තය]]
[[simple:Software company]]
[[sv:Programvaruföretag]]
[[th:ซอฟต์แวร์เชิงพาณิชย์]]
[[ur:صنعت مصنع لطیف]]

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Software industry