Computer Software Industry Trends & Overview

Overview

Since the 1990s, computers have become a part of everyday living for many people in the world. Most white-collar jobs, and now even many blue-collar jobs, involve the use of a computer in some form or another. In the medical industry, many hospitals now use handheld computers loaded with their patients’ chart information. Cash registers are now computers that track the sales of products for the store owner or manager. Very few occupations or industries do not use a computer in some form for some function. But all of these computers would not be useful at all if they were not programmed to do what users needed them to. That is where the computer software industry comes into the picture.

The software industry is composed of programmers, designers, marketers, sellers, and others who create the programs users need and then market them and sell them. Some programs are designed for general use and mass consumption, while other programs are custom-designed for a company’s needs. Computer software companies typically provide software for a specific niche or function. For example, some companies develop software for engineers, while others develop software for traffic control.

The field of computer software can be divided into three primary segments: corporate information services (IS) departments, software vendors, and consultants. Corporate IS departments usually implement and support software and hardware products for companies that produce nontechnical items or services. They work with the individual departments or lines of businesses within the company and their software needs. They then fill gaps by creating software the company needs to make it operate more efficiently, or they reprogram and improve existing software.

People who work for software vendor companies focus on creating products for sale. These products could be mass marketed for consumers, such as tax programs, home accounting programs, or home budgeting programs. Or, they could provide enterprise software to business niches, such as the restaurant industry, medical industry, or specific departments within those industries. Consultants are independent contractors who are hired by corporations to help implement new software packages. Consultants may be individuals, or they may be a company with several consultants for hire.

While there was a need for computer software in the early days of computer use, it was not until the personal computer hit the market and exploded in the 1980s that the demand for computer software led to the development of the industry. For the first few decades of the software industry, most software was designed to run on a desktop personal computer or a laptop. By the 2000s, there were more devices that contained computer chips and therefore needed software and applications, or apps, for their use or to expand their capabilities. These devices include cell phones, global positioning devices (GPS), personal digital assistants (PDAs), smartphones, and tablet PCs and readers.

According to the research firm, IBISWorld, the U.S. software industry generated revenue of $250.4 billion in 2018. About half (45.9%) of the total was attributable to application software, while systems software accounted for 27.9 percent. The remaining 26.2 percent was attributable to custom applications and activities such as technology consulting. IBISWorld named Microsoft as leading industry player in 2018, with 21.7 percent of the market. IBM Corp. ranked second at 8.2 percent, followed by Apple Inc. (5.7%) and Oracle Corp. (4.7%). A mix of other software companies accounted for the remaining 59.7 percent of industry revenue. The most common jobs in the computer software industry are software engineers, software developers, programmers, testers or quality control personnel, software marketers, sales people, and technical writers.

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