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In the eighties, there was a vast flowering of small independent software companies. Business and productivity software for the IBM PC, all manner of novelties for the Macintosh, games for the wonderful variety of home computers. In particular, at least on the PC, there were small and medium-sized companies writing original software, and also companies writing bespoke business software on contract; that also happened on mainframes, but for obvious reasons, the minimum size of a mainframe contract programming company is larger than on microcomputers.

There were certainly at least some such companies in the late seventies, e.g. Software Arts, developer of VisiCalc, and for that matter Microsoft, that started off as a small company supplying a version of Basic for the new microcomputers. I have a feeling there were far fewer ISVs in the seventies than in the eighties and later decades, though I don't have statistics.

But what was the situation in the early seventies, the sixties, the fifties? In those days the minimum price of a useful computer was much higher, software was not yet seen as a product in its own right, computers were more likely to be owned by big companies and other organizations that could have their own in-house programming staff, software might even be bundled with rented computers in a scenario where the vendor would not approve of third-party companies doing anything with the machine.

Did small ISVs exist in the era of IBM and DEC, before the rise of microcomputers in the mid-seventies?

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    Before microcomputers, the money was in the hardware, so software was often just a "service" and "shared". Lots of unix software was created this way, and for DEC, there was e.g. DECUS (catalogs are on bitsavers). So if you want, the users were the "ISV"s - a commercial ISV wouldn't have been able to make enough money with software to pay for the hardware. – dirkt Jun 8 at 4:56
  • Big ISVs didn't start out big... :) – RonJohn Jun 8 at 21:32
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    Software was and is a service. There was an historical blip in the recent past when people thought it could be bought & sold as a product. – Brian H Jun 9 at 4:25
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    You might want to define your terms. It seems that you're using ISV to mean Independent Software Vendor, but my memory was that it was Independent System Vendor. And yes, I remember many companies that existed to install dedicated systems with their own software (when I became a professional in 1984 I interviewed with at least one or two that had been around for a decade, albeit focusing on minicomputers not mainframes). – kdgregory Jun 9 at 11:05
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Small ISVs certainly existed. I work for a large ISV, but the product I work on traces its history to a company started in 1974, to commercialise some academic research. The intention was to be a consultancy, but it rapidly turned into an ISV, simply because the potential customers wanted to license that kind of software, rather than pay consultants to tell them how to write their own.

Before the microcomputer revolution, there were fewer pure ISVs. Many companies that sold software were also consultancies, service providers, system integrators, or bespoke software developers. For example, Computer Sciences Corporation was started in 1959 as a provider of programming tools, but became far better known as a services provider.

One significant factor in the rise of the software industry was IBM's decision, under regulatory pressure in 1969, to "unbundle" its software from its hardware, creating a new field for price competition.

Overall, the microcomputer revolution increased the number of ISVs dramatically. It took more money to start one before micro-computers, but there were ways around that, such as renting computer time from a bureau service.

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