The history of computer software is most often traced back to the first software bug in 1946. As more and more programs enter the realm of firmware, and the hardware itself becomes smaller, cheaper and faster due to Moore's law, elements of computing first considered to be software, join the ranks of hardware. Most hardware companies today have more software programmers on the payroll than hardware designers, since software tools have automated many tasks of Printed circuit board engineers. Just like the Auto industry, the Software industry has grown from a few visionaries operating out of their garage with prototypes. Steve Jobs and Bill Gates were the Henry Ford andLouis Chevrolet of their times, who capitalized on ideas already commonly known before they started in the business. In the case of Software development, this moment is generally agreed to be the publication in the 1980s of the specifications for the IBM Personal Computerpublished by IBM employee Philip Don Estridge. Today his move would be seen as a type of crowd-sourcing.
Until that time, software was bundled with the hardware by Original equipment manufacturers (OEMs) such as Data General, Digital Equipment and IBM. When a customer bought a minicomputer, at that time the smallest computer on the market, the computer did not come with Pre-installed software, but needed to be installed by engineers employed by the OEM. Computer hardware companies not only bundled their software, they also placed demands on the location of the hardware in a refrigerated space called a computer room. Most companies had their software on the books for 0 dollars, unable to claim it as an asset (this is similar to financing of popular music in those days). When Data General introduced the Data General Nova, a company called Digidyne wanted to use its RDOS operating system on its own hardware clone. Data General refused to license their software (which was hard to do, since it was on the books as a free asset), and claimed their "bundling rights". The Supreme Court set a precedent called Digidyne v. Data General in 1985. The Supreme Court let a 9th circuit decision stand, and Data General was eventually forced into licensing the Operating System software because it was ruled that restricting the license to only DG hardware was an illegal tying arrangement. Soon after, IBM 'published' its DOS source for free, and Microsoft was born. Unable to sustain the loss from lawyer's fees, Data General ended up being taken over by EMC Corporation. The Supreme Court decision made it possible to value software, and also purchase Software patents. The move by IBM was almost a protest at the time. Few in the industry believed that anyone would profit from it other than IBM (through free publicity). Microsoft and Apple were able to thus cash in on 'soft' products. It is hard to imagine today that people once felt that software was worthless without a machine. There are many successful companies today that sell only software products, though there are still many common software licensing problems due to the complexity of designs and poor documentation, leading to patent trolls.
With open software specifications and the possibility of software licensing, new opportunities arose for software tools that then became thede facto standard, such as DOS for operating systems, but also various proprietary word processing and spreadsheet programs. In a similar growth pattern, proprietary development methods became standard Software development methodology.