Software industry

Software industry

The software industry comprises businesses involved in the development, maintenance and publication of computer software. The software industry started in the mid-1970s at the time of the personal computer revolution. The industry also includes software services, such as training and consultancy. The largest and most profitable of software companies are located in the United States. As of 2006, the client software industry is dominated by MicrosoftFact|date=March 2008. Software Magazine's 500 list in 2005 shows the total amount of revenue brought in by software companies per locale, with the highest being California due to Silicon Valley and the amount of Fortune 500 software companies residing in that area. [ [ Software Magazine 500] (2005)]


There are mainly two types of businesses in the software industry; those developing proprietary software such as Microsoft, and those developing open source software. Developing proprietary software is costly and involves software licensing and the need to protect the software from cracking and piracy.

The main financial return on open source comes from selling services, such as training and support, rather than the software itself. Many contributors to open source software (especially those developing software tools) also feel that there is a significant long-term return in the form of improved resources and capabilities within the software industry. Despite doing much business in properietary software, some companies like Sun Microsystems and IBM participate in developing free and open source software to deter from monopolies and take a portion of their market share. Netscape's actions are an example of this, and thus Firefox has become more popular [Netscape_Navigator#Fall_of_Netscape]



Freeware is copyrighted computer software which is made available for use free of charge, for an unlimited time, as opposed to shareware where the user is required to pay (e.g. after some trial period or for additional functionality). Authors of freeware often want to "give something to the community", but also want credit for their software and to retain control of its future development. Sometimes when programmers decide to stop developing a freeware product, they will give the source code to another programmer or release the product's source code to the public as free software.


Shareware is a marketing method for computer software. Shareware software is typically obtained free of charge, either by downloading from the Internet or on magazine cover-disks. A user tries out the program, and thus shareware has also been known as "try before you buy". A shareware program is accompanied by a request for payment, and the software's distribution license often requires such a payment.

Open source

Open source describes the principles and methodologies to promote open access to the production and design process for various goods, products, resources and technical conclusions or advice. The term is most commonly applied to the source code of software that is made available to the general public with either relaxed or non-existent intellectual property restrictions. This allows users to create user-generated software content through either incremental individual effort, or collaboration.

Size of the Industry

Software Magazines' "Software 500 survey" can be used to gauge the value of the commercial software industry. The "Software 500 survey" consists of data of the top 500 software companies, as ranked by Software Magazine. Total worldwide revenues in 2006 for companies in the "Software 500" list were $394 billion, representing a growth of 3.5% from 2005, when total Software 500 revenue was $381 billion. [ [ Software Magazine - 2006 Software 500: Deep Concerns Over Security ] ]

See also

* Professional Open Source Business Model
* Computer software
* Software development
* Software publisher
* Software engineering
* World's largest software companies


External links

* [ Software Association of Oregon website]
* [ Software Industry Professionals website]
* [ Software and Information Industry Association website]
* [ Software Magazine website]
* [ Software Development News]
* [ Software Terms] A collection of software dictionaries

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