Software Publishers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 11,600 software publishers in the US produce and distribute computer software. Major product categories include application software publishing, system software publishing, and resale of merchandise. Firms are increasingly delivering software through cloud-based services (Software-as-a-Service or SaaS), in addition to on-premise products.

Technology Drives Constant Change And Investment

The information technology industry is characterized by rapid change and constant evolution.

Talent Shortage

Software developers are in short supply and many publishers are resource-constrained due to a shortage of skilled workers.

Industry size & Structure

The average software publisher employs 55 workers and generates about $38 million annually.

    • The software publishing industry consists of about 11,600 firms with 15,200 establishments that employ over 635,000 workers and generate about $446 billion annually.
    • The industry is concentrated at the top; the top 50 companies account for about 69% of industry revenue.
    • Large companies include Microsoft, Oracle, IBM, and Symantec. Large firms may generate a substantial percentage of sales overseas.
    • Companies that offer primarily cloud-based services may be classified under the Census as Data Processing, Hosting, and Related Services. Software publishers may offer hybrid products that combine on-premise, private cloud, and public cloud services.
                                    Industry Forecast
                                    Software Publishers Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    May 9, 2023 - Biden Administration Sets Cybersecurity Strategy Implementation Target
                                    • The White House plans to release its implementation plan for the new National Cybersecurity Strategy (NCS) in June. The NCS seeks to rebalance the responsibility to defend cyberspace by shifting the burden for cybersecurity away from individuals, small businesses, and local governments, and onto the organizations that are most capable and best positioned to reduce risks, according to a White House statement. Software publishers may be among the entities facing greater cybersecurity burdens. The initiative is intended to expand the use of minimum security standards for critical infrastructure and establish a common set of regulations to make it easier to comply with that baseline. It would also shift some liability for software and services to developers that ignore recommended cybersecurity practices or ship products with known vulnerabilities. A safe harbor provision would protect companies that make a sincere effort to develop secure products.
                                    • Worldwide IT spending will total $4.6 trillion in 2023, an increase of 5.5% from 2022, according to analytics firm Gartner. Businesses will prioritize spending on software in a bid to capture competitive advantages through increased productivity, automation and other software-driven transformation initiatives, Gartner analysts say. Software spending grew 8.8% in 2022 to $794 billion. Spending on software is forecast to hit $1 trillion by 2024. The Gartner forecast shows spending on devices will decline nearly 5% in 2023, as consumers defer device purchases due to declining purchasing power and a lack of incentive to buy.
                                    • Technology startups plan to hire some of the software developers laid off by industry giants like Twitter, Lyft, and Facebook parent company Meta, according to The Wall Street Journal. Kathy Zhu said she is lining up candidates for roles at Streamline AI, the two-year-old tech startup that she co-founded. They include prospects from “two or three companies that just had big layoffs,” she said. “There’s an abundance of talent right now, because of these layoffs,” Zhu said. “A few years ago, there was no way we could’ve attracted candidates like this.” A growing talent pool isn’t likely to lead to a full-blown hiring boom by startups, however, according to Pitchbook senior analyst Kyle Stanford. “Even well-funded young companies will be more strategic in their hiring practices than we would have seen a year ago,” Stanford said. Large tech companies cutting jobs because of the souring economic climate “should be a warning to small companies to preserve runway and opt for a sustainable growth, if growth is still possible,” he added.
                                    • Some software companies are prioritizing existing customer revenue goals over new sales, according to a survey conducted by research firm Alloy. About 73% of B2B software companies have accelerated existing customer revenue goals over the past 12 months while 41% of these brands are decreasing their emphasis on net new sales due to the prioritization of up- and cross-selling initiatives. Software brands are shifting their focus to a customer lifetime value, according to Anna Ruth Williams, chief strategy officer and partner at Alloy.
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