CHAPTER - 2

INDUSTRY PROFILE
MEANING
The software industry includes businesses for
development, maintenance and publication of software that are
using different business models, mainly either
license/maintenance based (on-premises) or cloud based
(such as SaaS, PaaS, IaaS, MaaS, AaaS, etc.). The industry also
includes software services, such as training, documentation, and
consulting and data recovery.

ORIGIN
The word software was coined as a prank as early as 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 UNIVAS and
IBM the first company founded to provide software products and
services was computer usage company in 1995.

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 programmes somewhere
disturbed freely between users of particular mission for no charge
others where done on a commercial basis, and other firms such as
computer science 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. The
computer/Hardware makers started building operating systems,
systems software and programming environments with their
machines.

When Digital Equipment Corporation (DEC) brought a

relatively low-priced micro computer 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 micro computers, so other
manufactured including IBM, followed DECs 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,

Microsofts first operating system product, was the dominant

operating system at the time. In the early years of the 21 st
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 has been attempted. From the point of
view of producers of some proprietary software, SaaS reduces the
concern about unauthorised copying, since it can only be a
accessed through the web, and by definition no client software is
loaded onto the end users PC.

INTRODUCTION
The software industry has transformed the way
organizations, businesses, and even people coordinate and work.
Its impact on the global economy and across various industries
can be gauged by the increase in innovations, technical progress,
enhanced productivity, and the workforce. Software refers to
computer program or data (bits and bytes stored), that can be
stored electronically. Its used by the computer processor to
perform various tasks. Mobile software applications (or apps) work
in the same manner as their computer software counterparts.
Apps are designed for specific tasks like games, global positioning
system (or GPS), and music

Software is expected to be the fastest

growing industry in the IT space

According to Forrester, in 2014 and as the economy improves,

the software industry is expected to be the fastest growing
industry with expected growth of 7.1%, followed by information
technology (or IT) consulting and systems integration services at

6.6% in the IT space. IT consulting refers to the advisory services

that help clients in assessing the benefits of different
technologies. It helps formulate a suitable technology strategy to
align it with clients business strategies.
System integration refers to the process of making diverse
hardware and software components work together as a system.
Its a value addition process of linking different computing
systems and software applications so that independent
applications work as one. The majority of funds allocated for IT
spending goes into software development, which clearly indicates
its dominance. The emergence of cloud, mobile computing, and
applications like business intelligence and analytics are making
sure that this growth isnt slowing down.
The software industry is involved in the development,
marketing, and sales and is multifaceted. Its scope ranges from
personal computer applications, operating systems, network
management tools, enterprise software, software applications,
operating systems, and customized software.

Why the software industry is separate from the

hardware industry

The software industry versus the hardware

industry
Software is computer instructions that are stored
electronically. The devices that store these instructions are called
hardware. Software and hardware are integrally linked, which
makes it confusing to distinguish one from the other. Also, rapid

advancement in technologies is blurring the difference between

software and hardware. The following chart shows the relationship
between software and hardware and how they complement each
other.

Features distinguishing hardware from software

Hardware refers to physical parts of the computer. Software
refers to the instructions given to the computer.
Hardware can be seen, touched, and feltsoftware cant.
Hardware is constructed using physical components. Software is
constructed by writing instructions in programming language.
On damage, hardware needs to be replaced. For software, the
backup copy needs to be re-installed when there is damage.
Viruses impact software, but not hardware.
Software can be transferred electronically through a network,
but hardware cant.
Hardware cant be duplicated. However, many duplicate copies
of software can be made.

Investing in software industry

There are various exchange-traded funds (or ETFs) that invest
in software and technology stocks. Popular examples are the
SPDR Technology Select Sector Fund (XLK), whose top holdings
include Apple (AAPL), Microsoft (MSFT) and Verizon
Communications (VZ). Another example is the Vanguard
Information Technology Index Fund (VGT) which invests in Oracle
(ORCL), Microsoft (MSFT), and IBM Corp. (IBM) as well as the
iShares Dow Jones U.S. Technology Sector Index Fund (IYW),
whose top holdings include Apple (AAPL), Microsoft (MSFT), and
Oracle (ORCL).

Why systems software is important in the

software industry
Systems software
The global software and services industry is comprised of
internet software and software. However, internet software
encompasses companies like Google and Yahoo that run search
engines to gather huge data like web pages. They process the
data at a lightning speed to produce search rankings. Software
can be classified into systems software, application software, and
middleware and tools. Microsoft (MSFT), Oracle (ORCL),
SalesForce.com (CRM), Google (GOOG), and IBM Corp. (IBM) are
key players in the software industry.

Systems software

Systems software includes operating system and the

associated programs, which enable systems and computers to
work. It provides the foundation for the infrastructure software
that links and manages hardware, networks, and software
together.

Components of Systems software

Its comprised of operating systems, system and network
management, and information management. The operating
system controls the basic functions of a computer or network. Its
a software program that enables hardware to communicate and
operate with the computer software. Microsoft (MSFT) is a leading
player in this segment with 90% of personal computers using
Windows as their operating system.

System and network management are involved in the provision,

capacity, performance, and availability of information technology
(or IT) systems and networks. For example, when the workload
increases, the processing capacity must be increased to
accommodate the larger workload, which is then managed either
automatically or manually. Fortinet (FTNT), Lucent (ALU), and
Symantec (SYMC) are some of the leading players in this area.
Under information management, database management systems
are used for data storage and organization. It includes:
Business intelligence analytic software products for storing,
access, and analyzing complex data
Data warehouse mining, quality tools, and storage management
for providing basic data organization functions like file systems,
volume management and physical replication.
Oracle (ORCL), Microsoft (MSFT), and SAP AG (SAP) lead the
database software market.

The System software industry caters to enterprise application

development markets through direct sales and channel partners.
Channel partners include value added re-sellers (companies
adding value to existing products and selling them) and system
integrators. Enterprise application development spans new and
complex technologies, varied programming languages, and
developer communities in response to the changing business
environment.

Why Application software is important in the

software industry

Application software
Application software or software applications (or apps) help
the end users perform single or multiple tasks. Application
software finds its presence in enterprise as well as non-enterprise
applications. Enterprise application software includes enterprise
resource planning (or ERP), supply chain management, embedded
software, and customer relationship management.
Non-enterprise application software includes:
Entertainment game applications for media, CD, and DVD
like Solitaire and Rhapsody
Graphics applications for image organizing, editing, and
sharinglike HP (HPQ), Photo smart Essentials, Adobe Illustrator
(ADB)
Security applications to detect firewalls and antivirus
protectionlike Norton

 Mobile apps application software meant for a mobile device,

Smartphone, or tablet

As shown in the previous chart, among all enterprise software,

ERP application is the largest application used worldwide followed
by Office Suites and CRM. ERP is enterprise software that
integrates all the operations and functions of an organization.
Office Suite refers to a collection of software programs that can
interact with each other. As a result, Office Suite programs are
generally distributed together (for exampleMicrosoft Office).

Difference between system software and

application software

System software provides the platform for running any

application or application software. System software differs from
application software because it integrates the computers
capabilities. However, it isnt involved in the tasks that benefit the
end user. The operating system is the system software that makes
your computer work. Application software is the software that you
install on your operating system.
Enterprise resource planning and supply chain management
includes applications for manufacturing and services. Oracle
(ORCL), SAP AG (SAP), Adobe systems (ADBE), and Salesforce.com
(CRM) are leading players in this space.
Customer relationship management, a part of the enterprise
software market, provides functionality to enterprises in sales,
marketing, call center, customer service, and support.

Why middleware is an integral component of

software industry
Middleware
Middleware and tools includes intermediary software thats
positioned between system infrastructure and application
software, allowing them to interact with each other. It supports
the planning, design, construction, quality control, and operation
of applications. Its primary function is to link system and

application software.

Enterprise application integration

The sequential binding of applications through the use of
middleware is known as enterprise application integration (or
EAI). Through EAI, a business can integrate all their support
systems and reduce the duplication of data, costs of
maintenance, and time to fulfill customer orders.
EAI does this by building a transition layer that handles all
communication between systemsacting as a hub. Then all the
subsystems only interact with the hub. They dont interact with
the other subsystems because the hub is responsible for all the
communication and transformations between subsystems. As a
result, the maintenance needs of the system are simplified. The
IBM Corp. (IBM) WebSphere is an example of how this integration
process is achieved.
According to Gartner, middleware (along with application
software) are quickly becoming the cornerstones of digital

business. The use of multiple delivery models, increased reliance

on governance technologies, and the convergence of application
and data integration requirements are expected to be the key
factors to generate significant investment in this market.
According to Ovum, middleware is expected to grow at a
compound annual growth rate (or CAGR) of 9.1% to reach $17.9
billion by 2018.