In the eight years following Marc Andreessen’s seminal Wall Street Journal article “Why Software Is Eating the World”, technology has continued its onward march and is now the single largest sector by market value in the US, having been the smallest just 25 years ago.
In this paper Hg’s Director of Research, David Toms, comments on the current trends in the global software and services sector.
After such a strong run for the technology industry and its investors, why are we still so excited about the opportunity for software and services?
At Hg, we see generationally sustained secular trends, driving and shaping technology spend and the accompanying investment landscape. In particular we observe four important trends:
- Rising labour costs driving accelerating software and services spend and specialisation;
- Hardware productivity growth (Moore’s Law) releasing spend for software and services;
- Cloud reducing friction, accelerating growth, and moving spend to software;
- “Private for longer” trend compounding growth of the opportunity pool.