State of the Software Industry
Note: This is the first post in a series about the role localization plays in the success of a company, especially that of a startup.
This is an exciting time to work in software development. All of the raw materials needed to build a successful product are universally accessible. Anyone with the skills and initiative to build great software can launch a company, but entrepreneurship is still risky business.
75% of startups fail. Some cite numbers even higher numbers in tech hotbeds like Silicon Valley, but the risk is balanced by an enormous upside. Many young companies are reaching profitability very quickly with extremely lean “shoe-string” startups leading the pack. Some have suggested that a fast failure is better than a slow success because it allows the core concepts to be tinkered with and improved upon and relaunched. Like the mythical phoenix, several ravenously successful software companies have been risen up from the ashes of failure.
But software has matured beyond the win big / lose big economy of traditional startups:
Especially in the mobile space, developers are creating great products for niche markets in their spare time and generating supplemental income instead of risking it all on a singular idea. Once seen viewed as anomalous, the mobile software development industry is here to stay.
Aapo Markkanen, senior analyst at ABI Research, made the statement, ”We’re no longer talking only about a short-term gold rush. Apps have become a major digital industry.”
Many apps remain free to consumers while generating tremendous revenue for the developers through ad sales. Mobile ads exploded in 2012. The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers reported a 14% gain in online advertising revenue in the first have of 2012 to $17 billion. Mobile ad revenue now accounts for 7% of total online revenue, up from just 4% in 2011.
Until recently, the video game industry was growing parallel to the stuffier software categories. Computer based games, generating a respectable half-a-billion dollars in revenue each year, have been dwarfed by their console bound counterparts which posted 10 times that amount in each of the last five years.
Mobile games are causing the same industry disruption that we have seen across the board. Roughly half of the paid apps in both Google Play and Apple’s App store market are games, accounting for 720 million dollars per year in combined. Though, half of that is spoken for by the elite tier of developers.
Before it was a buzzword, cloud computing was a major advancement in software deployment methodology, and it will remain an industry mainstay long after the luster has faded. Cloud computing has opened a world of possibilities, not the least of which is a total reinvention of software delivery. Software as a Service (SaaS) is the very powerful idea behind the world’s 60 fastest growing companies. That’s right. Numbers 1 – 60 on the list of fastest growing companies in the world, according to a CIOZone study, are all software companies, utterly dependant on cloud computing because they use a SaaS business model.
Though it is not a new idea, crowdsourcing is still a powerful force in the software market. The greatest triumph of crowdsourcing, Wikipedia, is old enough now to start showing laugh lines, yet what began as a quirk of the software industry has now spread beyond the borders of tech. According to Mashable, the biggest upcoming crowdsourcing projects are not in the least bit technical. Bottom line: though it has mostly exited its software industry nest, crowdsourcing is very much alive and well.
Though all of these large numbers might be impressive, the real growth in software is happening globally.
Here are a few examples that might startle you:
- The global SaaS market is forecast to grow by more than 15% in the next year.
- The United States accounted for a paltry 34% of the global revenue from iPhone apps.
- The Arab gaming market is expected to triple in the next 36 months.
- The largest employer in the world is the Chinese crowdsourcing agency, Zhubajie, which boasts a workforce 7.6 million strong.
Consider LinkedIn, which heads the Forbes list of 25 Fastest Growing Tech Companies. Founded in 2006, LinkedIn is a relatively young company only available in 2 languages, English and Spanish, for much of its history. The site now displays content and offers customer services in 19 different languages and counting.
The story is much the same for the other 24 companies on the Forbes list.
We don’t believe in coincidence.
Bottomline, there is a lot of money to be made in a software industry that has become highly mobile, mostly virtual, and absolutely global.
In our next post, we will explore the 4 Customer Expectations that Are Shaping the Future of Software.
- http://www.bizjournals.com/sanjose/blog/2012/09/most-startups-fail-says-harvard.html?page=all ↩
- http://smallbusiness.chron.com/average-time-reach-profitability-start-up-company-2318.html ↩
- http://www.nytimes.com/2012/11/18/business/as-boom-lures-app-creators-tough-part-is-making-a-living.html?pagewanted=all&_r=0 ↩
- http://techcrunch.com/2012/11/23/abi-cumulative-mobile-app-revenues-to-exceed-30bn-by-end-of-2012-nearly-double-2011-figure-now-major-digital-industry/ ↩
- http://www.iab.net/about_the_iab/recent_press_releases/press_release_archive/press_release/pr-101112 ↩
- http://www.forbes.com/sites/roberthof/2012/10/11/mobile-ad-spending-doubles-in-2012s-first-half/ ↩
- http://www.esrb.org/about/video-game-industry-statistics.jsp ↩
- http://techcrunch.com/2012/12/04/analyst-just-25-developers-grabbed-50-of-app-revenues-on-u-s-app-store-google-play-last-month-earning-60m-between-them/ ↩
- http://news.cnet.com/8301-13505_3-9919868-16.html ↩
- http://mashable.com/2012/09/14/federal-crowdsourcing/ ↩
- http://www.reportlinker.com/p0240405/Global-SAAS-Market.html ↩
- http://blog.appannie.com/localization-entry/ ↩
- http://gamasutra.com/view/feature/183156/what_you_need_to_know_about_.php ↩
- http://techcrunch.com/2012/12/08/asias-secret-crowdsourcing-boom/ ↩
- http://www.forbes.com/sites/ericsavitz/2012/05/02/the-forbes-fast-tech-25-our-annual-list-of-growth-kings/ ↩