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

                                    Apr 1, 2024 - Firms Increase Prices
                                    • Software publishers moderately increased their prices during 2023, according to the US Bureau of Labor Statistics (BLS). Employment decreased slightly during 2023 while wages for nonsupervisory employees increased significantly, according to the BLS. Software publisher sales are forecast to grow at a 5.82% compounded annual rate from 2023 to 2027, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
                                    • More than 50,000 technology sector employees were laid off during the first quarter of 2024, according to layoffs tracking site Layoffs.fyi. Layoffs reflect a broader trend in the tech job market, where companies increasingly lean on AI and automation for efficiency and innovation, often resulting in a reduced human workforce, according to Techopedia. More than 240,000 roles left the tech industry globally in 2023, according to Techpedia.
                                    • Commercial Chapter 11 bankruptcy filings increased 72% year over year in 2023, according to Epiq AACER. Bankruptcy filings may reduce spending on computer software. Overall commercial filings increased 19%. Subchapter V bankruptcies within Chapter 11 increased 45% during the period. “Though still below pre-pandemic figures, bankruptcies in all filing categories climbed last year amid the evaporation of pandemic emergency responses, increased interest rates, and tougher lending standards,” said Amy Quackenboss, executive director at the American Bankruptcy Institute.
                                    • Industry leaders including Amazon, Google, Microsoft, and Meta Platforms have been cutting dozens or a few hundred employees at a time as executives keep tight controls on costs, according to The Wall Street Journal. There is a reallocation of resources from noncore areas to projects such as AI rather than hiring new people, said Adam Ward, a founding partner at recruiting advisory firm Growth by Design Talent. “There’s a second look at costs, at lines of business, and where investments are going to be next year. The output are these microcuts,” said Ward. “This will be a new normal.”
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