Innovation in the Software Sector

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Douglas Lippoldt, Piotr Stryszowski
23 Nov 2009
9789264076761 (PDF) ;9789264063617(print)

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This book throws a spotlight on innovation across the software universe, setting out key issues and highlighting policy perspectives. It spans research and development, invention, production, distribution and use of software in the market. It also covers core innovation themes from a user perspective -- including security and privacy, mobility, interoperability, accessibility and reliability.
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  • Executive Summary
    Architecturally, software types can generally be described as belonging to one of three basic categories: i) applications, ii) operating systems, or iii) middleware. Applications are software programs providing functionality focused on a particular task for end users, and as noted above, may reside locally on a machine or be delivered remotely. Examples of common software applications for individual household and office users include text processing programs, electronic spreadsheets, desktop publishing programs or various email and web browsing applications. Operating systems reside locally, and serve as the platform interface between the hardware system and other types of user software programs while also providing services (e.g. file print). Middleware is a broad category of software ranging from task-specific functionality to platform-type functionality that permits applications to operate across operating systems and interoperate despite being written in different computer languages. Most software products have a fairly limited product life cycle; it is not uncommon for new versions of many software applications and operating systems to be released every few years. This is in marked contrast to other traditionally manufactured goods, such as furniture, major appliances and automobiles, which often can be expected to last for a decade or more.
  • Issues for Policy Makers and Industry to Consider
    Software is often poorly captured in economic statistics because of at least three main reasons. First software is evolving rapidly to take on new forms (e.g. software as a service). Second, it is a non-physical good and a part of it is created and exchanged outside the monetary environment. Last, there are lots of cross-border innovation activities and exchanges with software products. In order to develop policies that support software innovation appropriately, it is necessary to better understand several critical aspects of the innovation process. More emphasis on improving of measurement and data collection can help strengthen the understanding of policy development for software.
  • The Economic Processes of the Software Sector
    This chapter analyses how software (applications, software development tools, and systems infrastructure software, including embedded systems) differs from other technical fields in terms of innovation. It also explores the various economic processes – invention, production, distribution, use – for which software could turn out to be "different" – or, conversely – similar to other technical fields. In addition, this chapter discusses the ways software is measured by available statistics.
  • R&D and the Market Environment in the Software Sector
    This chapter explores the way R&D is handled by companies in the software sector in response to the rapidly changing market environment. The analysis is conducted in the light of the broader properties characterising the sector: how companies manage R&D, how they are funded, how they collaborate, how they use external resources, and so on. Additionally, this chapter provides four illustrative country case studies.
  • User Perspectives on Software Functionalities
    As the importance of software increases and has become social and economic "infrastructure," factors such as security, privacy, mobility, reliability, accessibility, and interoperability are becoming increasingly important aspects of software. This chapter explores how these factors are considered in the innovations and development process.
  • Annex A
    This annex outlines several studies on market penetration rates. The results are presented here in order to illustrate attempts to estimate the size of the software market taking into account software that is not fully covered in the general statistics. In particular, many of these studies focus on open source software (OSS).1 This review is presented in three sections: 1) survey-based studies, 2) census-like studies, and 3) country-focused studies.
  • Annex B
    While much of the buzz about software in the popular press is focused on consumers, businesses beyond the traditional software sector are playing a very significant role as both users and developers of software. Firms across the economy are deploying large amounts of software to power their operations and products. As discussed in Chapters 1 and 2, the amount of software in many types of products is increasing rapidly. For example, the number of lines of source code in a mobile phone is expected to increase from 2 million today to 20 million by 2010; by that time, a car may contain 100 million lines of code (Charette, 2005; Ito, 2007). The growth of software involves far more than a technical evolution. It will have consequences for companies, industries and national economies.
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