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The software industry includes businesses for development, maintenance and publication of software that are using different business models, mainly either "license/maintenance based" (On Premise) or "cloud based" (such as Saas, PaaS, IaaS etc etc) . The industry also includes software services, such as training, documentation, and consulting.
The word "software" had been coined as a prank by at least 1953, but did not appear in print until the 1960s. 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.
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/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 desktop 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 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. Infrastructure software, including operating systems, middleware, and databases, is made by companies and organisations such as Microsoft, Google, IBM, SAP AG, EMC and Oracle. Enterprise software, the software that automates business processes in finance, production, logistics, sales and marketing, is made by Oracle, SAP AG, Sage and Infor. Security software is made by the likes of ManageEngine 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.
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[clarification needed] account for 42.6% of the global software market's value.
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. 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 within the software industry 
Business models of software companies have been widely discussed. Network effects in software ecosystems, networks of companies, and their customers are an important element in the strategy of software companies.
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 of 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 development
- Software publisher
- Software engineering
- World's largest software companies
- Paul Niquette (1995). "Softword: Provenance for the Word 'Software'". adapted from Sophisticated: The Magazine ISBN 1-58922-233-4
- Elmer C. Kubie (Summer 1994). "Recollections of the first software company - IEEE Annals of the History of Computing". Annals of the History of Computing (IEEE Computer Society) 16 (2): 65–71. doi:10.1109/85.279238.
- Karl M. Popp and Ralf Meyer (2010). Profit from Software Ecosystems: Business Models, Ecosystems and Partnerships in the Software Industry. Norderstedt, Germany: BOD. ISBN 3-8391-6983-6.
- DataMonitor - Abstract from Global Software Industry Guide - 2008[dead link]
- "Statistics on Mergers & Acquisitions (M&A) - M&A Courses | Company Valuation Courses | Mergers & Acquisitions Courses". Imaa-institute.org. Retrieved 2013-02-04.
- Cusumano M. (2003) Finding Your balance in the Products and Service Debate, Communications of the ACM. Vol. 46:3
- Software Ecosystem: Understanding an Indispensable Technology and Industry. Cambridge, MA, USA: MIT Press. 2003. ISBN 0-262-13432-2.
|Look up software industry in Wiktionary, the free dictionary.|
- "“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.