Software as a Business

The term “software”, first coined in a 1958 article by John W. Tukey from AT&T's Bell Labs ([Tukey58]), has become an integral element of the English language and has been taken over into many other languages. In the beginning of the computer era, the computer was considered as a mere machine. Just like telling a motor to run faster by pressing the gas pedal, the computer was told by instructions what to do. Manufacturers sold the computer as a physical machine; the operating system and rudimentary software were added at no additional cost. Not before the early 60s was software considered as something independent and separate, and entrepreneurs started to see an opportunity for a software products business ([Cusuma04], p. 90).

At a NATO conference in Germany in 1968, the term “software engineering” was coined. It symbolized the decoupling of software programs from the machine which was triggered by several technical developments. In the beginning, the instruction sets were computer-specific, i.e. each processor had its individual assembler language. That is why programs were tied to the respective processor and could not be ported to any other processor. From the late 50s on, the first higherlevel programming languages like FORTRAN and ALGOL were created that enabledprogramming on a more abstract logical level. Compilers which transformed high level source code into different assembler languages were offered for these languages which meant for a programmer that learning the higher-level language enabled him to develop programs for different processors. Porting a program from one processor to another came into reach, even though Java's slogan “Write Once, Run Everywhere” was still considered a vision in the mid-90s. IBM released the /360 processor series in the mid-60s that contained processors at a broad spectrum of performance points that could be programmed with the same assembler language. This development allowed the decoupling of software from the machine, the understanding of software as something independent, separate. Pressed by the US Department of Justice and facing forthcoming anti-trust law suits, IBM announced on June 23, 1969, that it would unbundle hardware and software in the future. This can be seen as the birth date of the software industry as we know it today. Within a few decades, it has developed into a software market with a volume that IDC estimates at 243 billion $ in 2007, and at 327 billion $ in 2010, i.e. a compound annual growth rate (CAGR) of 7.7%. The worldwide market of IT services is estimated by %IDC at 486 billion $ in 2007, at 587 billion $ in 2010, i.e. a CAGR of 5.8%.