Martin Campbell-Kelly's book fills a long-neglected gap in the story of how computer technology has transformed the world in which we live. Histories of the people and companies that developed and marketed computers abound. Several books have explored the lives and achievements of the most exceptional software developers. And a number of books tell the stories of successful software entrepreneurs, though most of them are about Bill Gates.

Campbell-Kelly has provided us with the first comprehensive survey of the software industry from its origin in the firms that provided software under contract to the government in the 1950s to the home and recreation software industry of the 1990s. In the process, he shows clearly that, despite the preponderance of books devoted to Gates, Microsoft is not “the center of the software universe around which all else revolves.”

Campbell-Kelly segments the software industry into three sectors—software contractors, corporate software products, and mass-market software products—and shows how these three sectors developed, one after the other, as a result of the evolution of computer technology. Though each sector reached a certain level of maturity before the next emerged, the result was not the replacement of one sector by another. Rather, each new sector expanded primarily into new markets, bringing applications of computer technology within the reach of more and more customers, so that today the three sectors continue to thrive and grow side-by-side.

The earliest firms to emerge as “independent” software firms, i.e., companies selling software services that were not hardware manufacturers, were the software contractors formed in the mid-1950s. These were founded by entrepreneurially-minded individuals who had received their technical training as employees of the computer manufacturers or large computer users. The increasing use of computers by government and industry created a growing demand for these skills throughout the 1960s, and many thousands of software-contracting firms were formed. Most of these started small and stayed small but a few, such as Computer Sciences Corporation, Informatics, and ADR, became substantial publicly held firms.

The demand for the services these firms provided was so great, and their resulting growth so dramatic, that the late 1960s saw a major stock market boom in which the value of the shares of these companies multiplied many times, virtually overnight. As Campbell-Kelly relates: “By the summer of 1968…both investors and entrepreneurs had lost their prudence and had been caught up in a frenzy for computer stocks that seemed to know no bounds” (p. 79). The inevitable crash in the early 1970s put such a damper on the market for software company stocks that there were no further software company IPOs until Cullinane Corporation went public in 1978.

The Corporate Software Product sector began to emerge in the mid-60s when firms such as Informatics and ADR began to offer off-the-shelf software. A major factor in the development of the software product market was IBM's release of its 360 series of computers. The compatible operating systems across the various models of the series, and IBM's incredible success in marketing the 360s to thousands of customers, meant that there was a large enough market for off-the-shelf products that it became possible to recoup the large development costs required to create software that was flexible enough and robust enough to be used by multiple customers with minimal customization.

When IBM announced in 1969 that the cost of software would no longer be “bundled” into the cost of the hardware, a major barrier to the growth of the software product industry began to crumble. IBM's action changed the perception of software as a free good, opening the door for competitors to pitch the cost benefits of acquiring software from other sources.

Just as the 1960s was the decade of the software contractors and the 1970s was the decade in which the corporate software products industry grew into a significant market force, the 1980s saw the emergence of the mass-market software industry, triggered by the evolution of computers small enough to be “personal.” Campbell-Kelly covers a broad spectrum of the companies that were created to serve this vast new market and shows how Microsoft eventually came to its dominance of the personal computer software market.

One of the most important contributions of this book, however, is that it places that dominance of one sector of the market into the context of the much broader and deeper market for software used in many different environments and supplied by thousands of different vendors. For the first time, the true scope and influence of what has been largely an invisible industry has been made clear in a readable, informative narrative.