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This paper is an attempt to develop a model of the software industry based on historical principles in order to complement a number of studies of the industry carried out during the last decade that were based solely on contemporary data and the very recent past. A study of the historical development of the software industry can shed light on several questions only partially addressed by the previous literature: 1) Why does the United States dominate the software industry? What are the historical reasons for the weak positions of the European and Japanese software industries? Does the developing nations ’ software industry represent a threat? 2) What role has R&D played in successful software firms? 3) Why did IBM and the existing software firms fail to penetrate the market for personal computer software in the 1980s? 4) Can recreational software and multimedia publishing be incorporated into a model of the software industry? The software industry has existed since the mid-1950s, but until about 1970 very little attention was paid to it, largely because the 1 I am most grateful to Robert Seidel, director of the Charles Babbage Institute, and Judy O'Neill for their illuminating comments on a draft version of this paper. My thanks also to Luanne James, former president of ADAPSO, and Walter Bauer, former president of Informatics, who provided information used in this paper.
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