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The hardware alone cannot perform any particular calculation or manipulation without being instructed exactly what to do and in what order to do it. These instructions are hence as important, if not more than hardware and are called software. The software acts as an interface between the user and the computer.
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A software or a program can be defined as a complete set of written instructions written by the programmer which enables the computer to obtain the solution of problem (with or without data). Software is a general term that is used to describe any single program or group of programs.

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Application Software are programs employed by the user to perform some specific functions. For example, an application software can be a program used for inventory control in business or a program used for engineering design.

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System Software consists of all programs, languages and documentation supplied by the manufacturer along with the computer. These programs allow the user to communicate with the computer and write or develop his own programs. This software makes the machine easier to use and helps to make very efficient use of the resources of the hardware.

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Today well over 100 firms manufacture computer system units. Some are particularly strong in mainframes, others in minis, and still others in microcomputers. Only a few large firms offer products in more than one of these areas.
Many companies that produce their own system units also make supporting hardware. However, not all firms that make peripheral devices also make system units.

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Software is a major manufacturer of printers and display devices. Other companies specialize in certain industries. For instance, Diebold concentrates on technology products for banking, and Quotron specializes in products that relate to providing stock market quotations.

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IBM is in a class by itself as a major force in mainframes, small-business systems, microcomputers, peripheral equipment, and software. The Japanese firms, on the other hand, have become especially formidable players in the peripheral hardware markets.

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In recent years, there has been a virtual stampede into the software business. Entrepreneurs have been attracted to the field because the amount of capital required for starting a software firm is relatively low. All one really needs is time, access to a computer system, and some good ideas.

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Most software is produced by independent software firms rather than by companies that also produce hardware. Among the most prominent software-only firms are Microsoft Corporation, Lotus Development Corporation, Computer Associates International, and Borland International.