Operating Systems and Productivity Software Publishing
Business for Sale Industry Economics
2002 - 2021
2021 - 2027
Operating Systems and Productivity Software Publishing sector participants create and publish operating systems and productivity software that are required for computer usability. Due to the fact that industry software is often preloaded on new computers and similar devices, industry income is directly related to new device sales. Over the five years to 2021, as technology has become increasingly integrated into everyday life, industrial demand has increased.
Total revenue climbed as both consumer and company sales climbed over the era, owing to greater disposable income and significant private investment in computers and software. Over the five years to 2021, industry revenue climbed at an annualized rate of 9.5 percent to $130.2 billion. In 2020 and 2021, the COVID-19 (coronavirus) pandemic impacted critical upstream industries and consumers. Consumer spending and private investment fell last year, resulting in a 6.4 percent and 3.9 percent decline in industry revenue growth in 2020 and 2021, respectively.
Demand for servers to host and handle this information is increasing as more firms use cloud computing to store and access data and applications online. This has increased competition in the market for server operating systems, which is more fragmented than the market for personal computer operating systems.
Additionally, the adoption of the Software as a Service (SaaS) model, in which software is delivered online through a subscription model, increased the sector’s reach and lowered operational expenses, enabling the business to maintain a high-profit margin during the time. The business, however, is challenged by the rise of mobile technology, since mobile operating systems are not included in this market.
Private investment in computers and software will very certainly drive investment in computers and productivity software during the next five years to 2026, resulting in benefits for industry operators. Additionally, the software industry is ever-changing, with new releases and upgrades fueling ongoing customer demand. Private investment in computers and software, on the other hand, is expected to rise at a slower rate during the next five years.
Additionally, the number of online services and homes with a computer will approach saturation throughout the forecast period, resulting in slower revenue growth. Over the five years to 2026, industry revenue is predicted to expand at an annualized pace of 2.9 percent to $149.9 billion, indicating improved maturity.
The Operating Systems and Software for Productivity Operating systems and productivity software for PCs and servers are developed and published by the publishing business. Unlike other types of software that enhance the utility or entertainment value of computers, operating systems and productivity applications are often not considered discretionary.
A computer’s operating system enables a user to interact with it, and productivity software packages are critical for a range of corporate and personal-use functions. Additionally, since a significant amount of industry income comes from licensing software to computer makers, industry demand is driven by patterns in computer sales and ownership. As a consequence, industrial software demand is often determined by the demand for new computers.
Due to the growing popularity of internet services in daily life, computers have become indispensable tools for companies and individuals. Over the five years to 2021, overall industry revenue is predicted to grow at an annualized pace of 9.5 percent to $130.2 billion. However, as a result of the COVID-19 (coronavirus) pandemic, private investment in computers and software, as well as consumer expenditure, has been drastically reduced in 2020 and 2021.
Demand for industrial software has halted across a broad spectrum of company and consumer demographics. As a result, industry revenue is predicted to increase by just 6.4 percent in 2020 and 3.9 percent in 2021. Since 2012, the industry’s income has been stable.
Numerous operating system licenses are sold by computer manufacturers that offer their devices pre-installed with software. Microsoft Corporation (Microsoft), a market leader in the industry, derives the majority of its operating system income from original equipment manufacturer (OEM) sales. Licensing agreements enable Microsoft to benefit from economies of scale without incurring the upfront fixed costs or recurring depreciation charges associated with computer makers, resulting in increased profit.
Apple Inc. (Apple) on the other hand is vertically integrated across its supply chain, producing, distributing, and selling its own computers. While Apple’s operational expenses are fundamentally greater than Microsoft’s, the business has been able to generate revenue and increase market share by positioning its computers as high-end goods and concentrating on product design and usability. Profit margins, calculated as profits before interest and taxes, are predicted to account for 36.1 percent of sales on average in 2021. This is the same as the margin in 2016.
Apple’s vertically integrated strategy exemplifies the challenges encountered by lesser-known operating system producers in establishing a presence in the industry. OEMs prefer to license and deploy operating systems that support a diverse set of software applications. Similarly, software developers often build their products to work on widely utilized operating systems, which has facilitated the dominance of industry giants such as Microsoft.
While the sector is mostly defined by rivalry between a few industry heavyweights, smaller operators have entered the business in recent years, typically targeting specialized niches. Over the five years to 2021, the number of industrial firms has increased at an annualized rate of 18.8 percent to 7,328 operators. Despite the allure of a fast-growing sector, these tiny businesses often find it difficult to compete with the sector’s large players.
Employment in the sector has increased dramatically during the same time, increasing at an annualized rate of 12.3 percent to 295,475 people. As computers become more pervasive in everyday life and the business develops to meet expanding demand, operators have sought to recruit highly educated individuals by providing better compensation while increasing the number of entry-level roles.
Consumer demand patterns have shifted in recent years, which is anticipated to have an effect on the Operating Systems and Productivity Software Publishing market throughout the five-year period ending in 2026. Consumer purchasing may continue to gravitate toward mobile devices like tablet computers and smartphones deliver greater processing rates and more computer-like functionality.
Additionally, the market for home computers is nearing saturation, making the consumer sector a consistent but declining source of income for the sector. Additionally, this tendency indicates an increased danger of competition from mobile goods. Consumers who already possess a computer, for example, have become more interested in the newest tablets and smartphones, rather than the newest PC model or software update.
As a consequence, the industry’s fastest-growing segments are projected to be the corporate sector, where classic desktop computers and laptops continue to be extremely popular. Industry revenue is predicted to expand at an annualized pace of 2.9 percent to $149.9 billion during the five years to 2026 as operators concentrate on this area.
Microsoft Corporation (Microsoft) and Apple Inc. (Apple) are expected to maintain their market dominance for the next five years. The need for operating systems is mostly driven by the evolution of computer technology. Because the operating system is the primary software component that interacts with computer hardware, hardware advancements often need operating system changes.
As a result, customers who choose technologically powerful computers will continue to drive demand for operating systems. Both large corporations are projected to deliver new operating systems throughout the forecast period, stimulating demand and generating income. Apple is expected to continue expanding its market share, as the home penetration of Apple devices continues to grow.
Open-source software will continue to pose minimal danger to the income of big companies, owing to the widespread familiarity of the Microsoft and Apple brands, as well as the ease of installing productivity applications on new machines. However, as more customers become aware of the software programs available, the attraction of open-source software is expected to grow.
Over the five years to 2026, the number of industrial businesses is predicted to expand at an annualized rate of 11.1 percent to 9,569 firms. During the same time, the total number of industry employees is predicted to increase at an annualized rate of 5.9 percent to 394,428 people.
This sector creates and distributes operating systems and productivity applications for personal computers and servers. An operating system provides the user interface for computers; productivity software contains fundamental programs such as word processors, spreadsheets, and tools for creating slideshows. Additionally, businesses may earn cash via technical assistance and software resales.
This industry does not cover the manufacture of computer hardware or the development of mobile phone operating systems. Operating Systems and Productivity Software Publishing is a developing business. Industry value added (IVA), which is a proxy for an industry’s contribution to the economy, is predicted to grow at an annualized rate of 7.1 percent during the next decade to 2026.
In contrast, the US GDP is expected to increase at an annualized rate of 1.9 percent during the same ten-year period. IVA growth is much faster than GDP growth, indicating a thriving sector. Additionally, although the US GDP is expected to decline by 3.5 percent in 2020, IVA climbed by 10.2 percent in the same year. This is because operators benefited from the increased ease with which they could maintain their relatively high operating revenue levels.
Sector-specific software applications have extended the business’s main markets, indicating that the industry is expanding. Nonetheless, this industry’s software is critical to the use of computers and to perform simple activities such as word processing. As computers have grown indispensable for day-to-day commercial operations in the United States, the industry’s software has grown indispensable for enterprises and consumers alike. Complete market acceptance of the industry’s main software is a sign of maturity.
The industry’s growth is mostly driven by new computer sales, which generally contain an operating system preinstalled. As a result, computer sales in the United States are highly correlated with corporate profit and disposable income levels. The sector has enjoyed tremendous growth over the last five years as a result of substantial corporate profit gains over time.
Additionally, growth is driven by software upgrade licenses, which are often scheduled to coincide with the introduction of new software from the major software publishers, most notably Microsoft Corporation. As long as computers remain a significant part of companies and consumers’ everyday routines, this sector will see constant demand for its goods.
However, as computer penetration in the United States approaches its natural saturation point, the domestic market’s growth potential is limited, since fewer customers buy new computers or laptops each year. As a consequence, the business market’s significance has increased significantly during the last five years.