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

                                    Nov 16, 2023 - Firms Increase Prices
                                    • Software publishers moderately increased their prices during the first 10 months of 2023 in response to increasing demand. Software publishing industry revenue increased 8.3% year over year and 0.4% quarter over quarter during Q2 2023 to $125,028 million. Labor costs increased, as employment and wages for nonsupervisory employees increased slightly during the first 10 months of 2023.
                                    • President Biden issued an executive order on artificial intelligence (AI) which focuses on safety, privacy, protecting workers, and protecting innovation. Safety requirements include requiring companies developing AI models that pose a serious risk to national security, economic security, or public health to notify the federal government when training the model, and they must share the results of all safety tests. The Commerce Department will also develop guidance for content authentication and watermarking to label AI-generated content. Privacy requirements include a mandate to develop techniques so AI systems can be trained while preserving the privacy of the training data. The order will also evaluate how agencies collect and use commercially available information containing personal data. Worker protection requirements include the development of principles and best practices to mitigate the harms and maximize the benefits AI creates for workers by addressing issues including job displacement, labor standards, and data collection.
                                    • Software now accounts for $1 in every $8 of total business expenditure, according to Spiceworks, a professional network for the information technology industry. The cost of software is rising so fast that it is outpacing market inflation by four times, according to Spiceworks' SaaS inflation index. Spending on software products grew more than tenfold from 2010 to 2020, increasing from $13 billion to $157 billion annually. It would take 18 years for the cost of software to double if the average increase in software spending rose along with economic inflation alone, according to Spiceworks. It’s only taken five years for software spending to double, however.
                                    • 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.
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