The Business of Software

Perceptions of the Software Industry

Software is one of the few unique industries in the business world. For starters, its visionaries often set out to change the world – and succeed. For instance, as far back as the mid-1970s, the founders of Microsoft Corporation looked at the future expecting to see personal computers in every home and office, and also expecting to see their software running those PCs. Moreover, the software industry ultimately sells little more than binary zeros and ones that tell computers what to do. Unlike traditional companies in the manufacturing and service sectors, software firms spend about the same amount of money to sell one version or a million versions of their products. Companies that are founded to make and sell products invariably morph into service companies. And in what other industry would companies rush products onto shelves in spite of known flaws?

While the American software companies are the best known, it’s instructive to look at the software cultures in other places. In Europe, for example, software is considered a science. This viewpoint leads companies such as Germany’s SAP to create complex, intricately detailed applications...