The group's end markets are also wide ranging, with nearly every facet of the global economy being targeted. General Characteristics Broadly speaking, this industry can be broken into two, though somewhat overlapping, segments-one in which the primary product is a suite of software and services offered via a perpetual license agreement the customer purchases the softwareand one in which a combination of software and services is offered as a tailored solution to a vertical market's recurring need customers usually contract for services.
Continued from Part 7 Software industry landscape The software industry is highly concentrated. A small number of players dominate the industry holding relatively high market shares. The confluence of network effects, law of increasing returns, and switching costs associated within the industry can explain its concentration.
Network effects Organizations prefer to develop and deploy application and information systems in an environment that has a strong network of supporting infrastructure and a large customer base. This minimizes compatibility issues and maximizes portability.
Compatibility ensures ease of data exchange. It has limited variations to offer, which makes it unsuitable to different end users. Certain industries and organizations cater to customers with various requirements. Mass market products are standardized while products catering to a niche market are customized.
Standardization is most likely to be pursued by a product organization to drive economies of scale. Customization will be preferred by services because it helps them in the value chain. Network effects tend to give the leading players a competitive edge and monopoly over pricing power, which imposes a significant barrier to competition.
Microsoft harnessed its success and dominance in operating systems by selling its office software. However, when the differentiating feature of a product is stronger, then niche products can survive in spite of a weaker network.
Apple AAPL is a classic example with its sticky market share. Switching costs Once customers adopt specific operating systems, it would be very difficult for them to even consider changing it. Organizations make huge investments in buying an operating system and training their employees.
Story Continues Law of increasing returns At first, huge costs are incurred to develop proprietary software. The packaging costs falls with volume. As a result, the cost of software per unit tends towards zero with volume.
Both network effects and increasing returns rules out or minimizes competition in the proprietary software market. Also, leading players apportion huge marketing expenditure. The marketing becomes more important than software features and its quality.Vision Critical's customer intelligence software allows companies to develop an authentic customer experience while gaining valuable feedback and insight.
AN OVERVIEW OF INDIAN SOFTWARE INDUSTRY Today, India is home to some of the finest software companies in the world. The software companies in India are reputed across the globe for their efficient IT and business related solutions.
The Indian Software Industry . NEW YORK, March 29, /PRNewswire/ -- The global enterprise software market has reported a significant growth in the recent years and is presenting ample opportunities to the industry's players. MadCap Software offers a complete suite of solutions to meet the authoring and publishing needs of technical writers and documentation managers.
The software industry is highly concentrated. A small number of players dominate the industry holding relatively high market shares. For example, Microsoft (MSFT) dominates the personal computer market, SAP AG (SAP) is the leader in the enterprise application software segment, and schwenkreis.com (CRM) dominates customer relationship .
The leaders of Anaplan, Jive Software, and Synopsys discuss their experiences growing their companies while managing the challenges that accompany rapid expansion.