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Software engineering economics

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Software engineering economics

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, MaaS, AaaS, etc. etc.) . The industry also includes software services, such as training, documentation, and consulting.

History

The word "software" was coined as a prank as early as 1953, but did not appear in print until the 1960s.[1] 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.[2]

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 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 computing to the desktop of the office worker. 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 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

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. Americans account for 42.6% of the global software market's value.[3]

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.[4] 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.[5][6] Network effects in software ecosystems, networks of companies, and their customers are an important element in the strategy of software companies.[7]

See also

References

External links

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