First Research US Industry Profile

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Computer Software
SIC Codes: 7372
NAICS Codes: 511210
Last Quarterly Update: 5/27/2019
Companies in this industry design and publish computer software. Major companies include US-based Activision Blizzard, Adobe Systems, IBM, Microsoft, Oracle, Salesforce.com, and Symantec, as well as Dassault Systemes (France), The Sage Group (UK), and SAP (Germany).
Global spending on enterprise software is nearly $400 billion per year, according to Gartner. The US is the world's top software-producing country in terms of revenue; other major producers include Germany, the UK, and Japan. Many US-based software companies outsource some of their production work to other countries due to the high cost of domestic labor.
The US computer software industry includes about 10,200 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $240 billion.
Competitive Landscape
The health of the global economy heavily influences spending for software products. The success of software companies depends on technical expertise and effective marketing. Small software companies compete mainly by targeting niche markets or developing new technology. Many small companies form alliances with larger ones to market their products. The US software industry is concentrated: the 50 largest companies generate about 75% of revenue.
Competitive Advantages:
Access to Programmers - The ability to attract and retain talented programmers is crucial in the software industry, where developer shortages are a widespread challenge. Companies with adequate resources may recruit internationally, but immigration laws hinder that practice in some markets.
Global Reach - Because software spending is so closely tied to economic growth, the ability to sell into multiple countries and regions can provide critical protection against downturns in individual markets.
Operational Agility - The software sector is marked by rapid innovation and disruptive technologies, factors that favor companies with the ability to quickly bring products to market and adjust development strategies as markets shift.
Companies to Watch:
Google is best known for its search engine, but the company looms as a competitive threat in multiple software segments with its growing portfolio of largely hosted (and often free) consumer and business applications.
The largest software company in the world, Microsoft has long dominated both the consumer and enterprise software markets.
Salesforce.com embraced software-as-a-service from its outset, and the company continues to be a leading force in the cloud-based enterprise software market.
Products, Operations & Technology
Major product categories include application software (such as enterprise and accounting software, office suites, and games), which accounts for about ... plus:
Sales & Marketing
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Finance & Regulation
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Regional & International Issues
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Human Resources
Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms

Historical Profiles (PDF format)

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