r/dataisbeautiful • u/XsLiveInTexas • 5d ago

OC [OC] Spend on software will exceed $1 trillion for the first time in 2026

Post image

In 2011, the popular VC firm Andreessen Horowitz said "Software will eat the world" which is still their tagline.

In a recent email by Cubbie, a company which ranks the top software products, showed breakdown of spend by different software categories.

So, I put together a historical chart showing the rise of software, shown through the lens of how much companies are actually spending on it globally. I factored in the likely spend given the rise of workforce increases next year and the ongoing shift toward AI tools, which are obviously accelerating software adoption.

Tools used: Python / Matplotlib

275 Upvotes

92% Upvoted

30 comments sorted by

56

u/DisastrousCat13 5d ago

This seems low? I get that I’m a human and understanding large numbers is not something my monkey brain is good at, but the number seems low to me.

30

u/Wut0ng 5d ago

It is in fact very low, because OP only included software expenses of companies, not individuals. For example, most software produced by Apple is made for individuals, so these are not included in the chart. It also doesn't factor in company producing their own software for themselves, as they are not charging themselves for using it.

OP also mentioned in another comment not including OS, which is probably a big part of company tech expenses.

10

u/XsLiveInTexas 5d ago

Yes but keep in mind this is every year

Something else I found: global technology spend will be $5 trillion in 2026, but this would include everything else on top of software, which means IT and general technology labor and whatnot (it excludes hardware and devices though)

0

u/ObvMann 4d ago

Yeah, I mean Microsoft revenue alone is 143 billion

35

u/PreparationAdvanced9 5d ago

We spend about the same amount of money on the pentagon every year

15

u/PharahSupporter 5d ago

The US defence budget is $850bn in total, not $1tn and it is not all just for "the pentagon", thats a gross simplification.

9

u/PreparationAdvanced9 5d ago edited 5d ago

I said it’s an approximation by using the word “about”. It’s a 10-15% difference. Trump has proposed $1 trillion budget for this year as well which he will most likely get. The US defense budget, formally known as the national defense budget, includes the budget of the Department of Defense (DoD), often referred to as the Pentagon budget, as well as defense-related spending by other agencies. The pentagon budget is over 90% of the DoD budget.

1

u/frozen_tuna 5d ago

That means people at the pentagon spend it. Original comment makes it seems like the pentagon itself (an actual place that costs money to run) is costing $1T.

4

u/ObvMann 4d ago

The Pentagon is usually a euphemism for US military. Like when people say Washington they don’t just mean the city they mean the capital of the country and therefore it’s leaders and what they’re doing.

0

u/ObvMann 4d ago

Yeah, and when people say the Kremlin, they’re not literally just talking about the building

19

u/guesswhochickenpoo 5d ago

But how is "software" classified? Smartphone OSs are software, apps are software, CRM systems are software, manufacturing uses software, games are technically software. Where's the line? What are the categories included or excluded?

10

u/XsLiveInTexas 5d ago

I took data from Cubbie so it only included SaaS, enterprise software, etc. Like you said it would include software like CRM...code generation software, HR software, and whatnot

So things like the actual phone or consumer apps or games aren't included

4

u/mhornberger 5d ago

So things like the actual phone or consumer apps or games aren't included

And games alone make more than movies and music combined.

-4

u/czarxander 5d ago edited 4d ago

Smartphone OSes are firmware, not software.

The chart also pretty explicitly says "Enterprise software", meaning B2B stuff like Salesforce, Workday, Slack, Autodesk, etc.

Edit: I stand corrected, smartphone OSes are indeed software. And apparently, firmware is also a software.

We are ALL software on this blessed day.

3

u/guesswhochickenpoo 5d ago

An OS by definition is software and distinctly different than firmware. Smartphones bundle it together for updates and the lines can get a bit blurry behind the scenes but calling iOS (for example) straight up firmware is a stretch.

Good callout on the 'enterprise' part. I had somehow missed the title and it wasn't called out in the longer description which just says "top software products", "different software categories", etc.

3

u/eunit250 5d ago

We do what we can to stay on open source.

1

u/BALLSTORM 5d ago

Now that's a pretty cool feat.

1

u/-Vikthor- 5d ago

Did you factor in inflation?

1

u/ObvMann 4d ago

Is this in the US? The world? Are we counting OEM software that comes with hardware? How do you split that out really?

1

u/MajesticBread9147 5d ago

And yet our politicians will still prioritize manufacturing.

0

u/Colonelfudgenustard 5d ago

The expenditure is sure to follow.

0

u/focksmuldr 5d ago

We need to send ourselves back to the bronze age

-7

u/RonHarrods 5d ago

Wow BTC market cap is more than software spending. Interesting. Though not remotely apples to apples. BTC is a theoretical timestamp number and software spend is real flow of value over a time period.

7

u/XsLiveInTexas 5d ago

The market cap of all the software companies is much higher than the $1 trillion though 😉
This chart here is pure cash flow spend/revenue each year

0

u/RonHarrods 5d ago

Yeah and please do not tell me the market cap of real estate world wide. I feel so insignificant sometimes.

6

u/angrathias 5d ago

The MC of 1 software company like MS is 4T, so a bit pointless comparing MC of BTC to revenue

1

u/RonHarrods 5d ago

Yes. I wrote down what first came to mind. But I do understand that I should unironically expect critisism in this sub for such a statement. Hence I tried to explain I too understand they're not apples and apples. Nice fun fact though. 4T for MS. I'll remember it and some day bring it to conversation after which people will wonder why I know that. I don't even own any stock of it.