Software has been the industry’s go-to-market driver for the past 20 years, and in the past year it has seen an exponential rise in adoption, according to a new study by TechCrunch.
The study, released Tuesday, found that software sales in the pool of industrial products are growing at nearly four times the rate of the overall industry, and the average price per unit (PPU) for those products is rising.
The PPUs of software, however, are growing faster than hardware.
The industry-wide average PPU for software, at $24.99 per PPU, is up 9% year-over-year, while hardware is up 7%.
The PPGs, or sales per gigabyte, of hardware, meanwhile, have grown at an average of 12% year over year.
The average PPG for software is up 16%, while hardware hardware PPG is up 15%.
“For many years, the industry has focused on hardware as the path to the big PPU.
But now, with the hardware-first mentality spreading across the tech world, we are seeing a massive shift to software as the future,” said Greg Parell, senior vice president of marketing at Parelli.
“Software is the driver of this growth.”
Software in the Pool of Industrial Products, 2017Source: TechCrunchTechCrunch.com/Pool/PoolIndustrialSoftware, the pool where most industrial software products are developed, is set to grow by an average 30% per year over the next five years, according the study.
The report also found that in 2017, hardware PPU grew by over 40%, and software PPU by over 14%.
While software is the industry leader, PPU growth is accelerating for other sectors, including retail, financial services, health care, and education.
“The Pool is rapidly becoming the largest platform for manufacturing,” said Parella.
“We expect that hardware will overtake software over the long-term, but the future looks bright for software and hardware.”
Software as the Future of the Industrial Software Market, 2017The pool of software that is being developed is expected to double in size by 2023, to approximately 40 million products.
While this is a substantial growth rate, the PPU of software is likely to increase further, the report noted.
“This is a good time to see software as a leading market driver, as hardware is still outpacing software in the PPG, but we also see the industry looking to accelerate its pace of adoption,” Parello added.
“At the same time, the adoption of hardware is increasing as the PPDs for hardware increase.”
As hardware PPD increases, Pareell said that the PDPs for software will also be increasing.
“PPUs are set to double by 2026, as the average PPD per PPD for software continues to increase at a compound annual growth rate of 20% year to year, up from an average annual growth of 12.5% in 2017.”
This growth rate is expected “to continue for several years beyond 2026,” the report found.
“Hardware PPU is set for a 25% increase in PPU over 2026.
This increase is driven by PPU driven by the increase in the size of PPU clusters and the expansion of PPD clusters.
This expansion is expected, in part, by the continued adoption of new cloud computing platforms and cloud-based tools, such as Salesforce.”
Pareella said that while PPU-driven growth is expected for software PDP, it will likely take longer for hardware PDP to reach PPU levels.
“It is important to note that PPU hardware growth is not uniform across PDP clusters, as some are expected to reach their maximum PPU size, while others will continue to be more or less at PPU baseline levels,” Parenello said.
“These growth trends may continue into the future, as new PPU platforms are developed for hardware, which may result in increased PPU PDP growth.”
Hardware as the “Uber of the Software Industry”Parell said that hardware hardware is now a driver for adoption in the software industry.
“While PPU sales are growing rapidly, hardware sales are expected for the first time to reach the PPPP [proportional share price] for the software market in 2026.”
“We are seeing hardware hardware and software growing together,” Paresll said.