Foremost is the leading role U.S. vendors played in developing the software industry. This has given U.S. firms a technological edge and made the United States the locus of high-quality, innovative software development. The size and sophistication of the U.S. market also contributed to the competitiveness of U.S. vendors, resulting in a variety of niche products, a great number of firms, and intense competition. The principal competition to U.S. vendors comes from companies in Japan and Western Europe. Three Japanese firms and one European firm are among the world's top 10 software suppliers.
Competition is strongest within Japan and Europe.
For different reasons, Japanese and European software suppliers have little international presence. European software suppliers generally specialize in custom software and services. Japanese suppliers are typically aligned with major Japanese hardware vendors and concentrate on the domestic market. Software suppliers from other countries, such as China, India, and Brazil, will likely grow in influence in the coming years. However, they now trail U.S., Japanese, and European vendors in technological innovation.