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Michael Luddy

[edit] System Software

System software provides an interface between the hardware and application software, for example operating systems.

[edit] Middleware

Middleware is the software that connects different software applications on the users computer.

[edit] Application Software

Application software is the software used to do different tasks directly on the computer. The primary subcategories of application software includes database software, office suite software (word processing, presentation, spreadsheet), and enterprise software. Application software makes up just under half of all packaged software sales in the world.^[1]

[edit] Trends and Forces

[edit] The Rise of Open Source Software

The IDC, an information market research firm, projected that growth of Linux, an open source operating system, would be about double the growth of windows between 2007 and 2011.^[2] As its name sugests, Open source software has source code that is "open" and readily available and can be changed by anyone. Open source software is usually sold for a small license fee, but the majority of open source revenues come from selling support and training. Open source is a much cheaper option than traditional application software offerings, but raises security concerns for many companies. However, major traditional competitors such as Microsoft and Oracle realize the threat of open source and are either developing their own open source software or selling support to existing open source software.

[edit] Cloud Computing could Change the Way Software is Delivered

Traditionally, application software is sold for a license fee and installed on the computer. Cloud computing completely changes that. Cloud computing provides On-Demand software, which means a central server would be responsible for the delivery and maintenance of your software over the internet. In most cases, the end user would pay a subscription fee to use this software. Cloud computing eliminates a lot of costs for companies because a company would no longer need to pay for on-site servers, maintenance fees, or licensing fees. Traditional software companies like Oracle (ORCL) , SAP AG (SAP) , and Lawson Software (LWSN) are threatened by the adoption of cloud computing.

[edit] Enterprise Software: A Maturing Market

Enterprise software sales growth reached its peak in the late 90's, but since 2000 growth has been tempered. Growth started to decline between 2000 and 2003, but has leveled out and stayed in the mid-high single digits since then.^[3] In response to the slow growth, software vendors began to consolidate. Buyer's are now purchasing more from single vendors because of the wider product offerings. This gives greater purchasing power to the buyer's and the vendor's are pressured to lower prices to attract these customers. In addition, the growth of On-Demand (or Software as a Service, SAAS) has taken some of the demand from traditional enterprise software. SAP AG (SAP), Oracle (ORCL), CA (CA), and BMC Software (BMC) are few companies that get a lot of their business from enterprise software.

[edit] Software Piracy Plagues the Industry

In 2007, a study by the Business Software Alliance and the IDC found that for every $2 of software sold legitimately, $1 was lost to piracy. This translates into about $40B in revenue.^[4] Piracy is more of a problem in developing countries, such as China, rather than developed countries like the US.