The increased sophistication of computers has brought with it some interesting analogies. Presently, the terms "software" and "hardware" are universally familiar. The hardware, which represents the actual machine apparatus of the computer has been compared to the body, while the software, which is essentially the program systems and packages that direct the machine has been dubbed the "brain." In order to have a functioning computer, the hard and software systems must be successfully integrated.

In the past few years there has been a growing trend toward the development of the software portion of the industry. Previously, especially in the Republic of China, industrial development of the computer industry had focused its attention on the manufacture of hardware systems. The increased investment and emphasis on the software sector was given further confirmation with the successful development of a new package, the "Big Five". Developed over a period of nine months at a cost of close to US$400,000, this new integrated software package represents the cooperative effort of some of the nation's leading software manufacturers. While the significance of such an achievement is far reaching indeed, the actual effect of this type of development is really more important. The value of such a project will have a tremendous impact on the course of future development of the software industry in the Republic of China. As the country strives to shift industrial emphasis into the realm of high technology, these present movements in the software industry will give significant directional pull to future growth.

At present the computer industry, and its component sections, the soft and hardware areas, occupy top priority in the government's strategic plan for future industrial development of the nation's economy. In assessing the role of the software portion there are several key problems. The government has targeted an annual production figure of US$700 million in software production by the year 1989. This stands in striking contrast to the present production figure of $10 million. The projected 1989 goal represents an even split in terms of domestic and export sales. The present 1984 figure represents virtually no export sales. In comparison, the current hardware sales figures are a healthy $900 million for exports alone, reflecting the quality of workmanship and technological skill of domestic computer companies. Therefore one of the most crucial problems facing the software industry in this connection is just where to start in terms of development.

As previously mentioned, if the hardware (which is the machine) represents the body, the software acts as the brain. Represented by program systems and packages, the software directs the successful operation of the machine system. The earliest computers (1950) were not designed with distinct hard and software portions. Rather, the computer was really just a more sophisticated machine that was operated by the rapid transfer of electrical impulses. Like a simple electric light switch that responds to the push of the button to either "on" or "off", these computers represented a group of different switches that responded to the electric "pushes". Development of computers centered around increasing the number of combinations of switches (circuits). The role of the design engineer became important as the number of combinations became more complicated. As each "switch" had a specific code, the engineer had to develop a system that brought greater convenience to the smooth operation of the machine.

The development of "hard" and "softwares" represents a new convenience in computer manipulation. Increased sophistication of the machine apparatus (hardware) signaled the need for the development of a "brain" system (software) to handle and direct the increased number of body functions. Programmers became extremely important as it is their job to develop new programs involving increasingly complicated steps. The software portion of the computer industry has therefore developed many distinct levels reflecting the relationship between the operator and the machine. Two representative levels of great significance are the Operating System and the Application Procedure or Package.

The Operating System represents those basic components that are related to the machine hardware, while the Application Procedure refers to those specialized needs that are applicable to the user of the computer. For example, when looking at an accounting system for a computer, the OS is the computer's ability to do the basic calculation and logical arrangement (i.e. of data). The AP on the other hand would be the specific use that the program or package contains such as setting up an independent accounting system specifically for this purpose. The OS shares a close relationship with the hardware (in fact most OS functions are usually part and parcel of the hardware apparatus), while the AP is the specific program that can be obtained from "soft houses", companies that deal exclusively in the design and marketing of software systems.

Occupying a central position lying somewhere between the OS and the AP are a group of software products known collectively as "Environment Software". These are "tools" that help the operator direct the computer. For instance, the now familiar computer languages like Fortran and Cobalt are examples of these service tools. The closer the tool is in its relationship to the OS, the higher the level of pure machine technology. Likewise, the closer it lies to the AP the greater the emphasis on its understanding of the operator's needs.

In order to produce the most integrated computer system, equal attention must be paid to the complete development of soft and hardware systems. In the past no matter if it was in the Republic of China or abroad, there was a distinct bias towards the development of the hardware aspects of the computer. Trends change and today it is the software industry that receives greater attention. There are logical reasons for this shift. First, production of the hardware machinery has entered the mass production, fully automated stage so that manufacturing costs have dropped and thus the market price has fallen. Software on the other hand has become increasingly complex in response to the expansion of operator needs and computer functions. As a result of this development the software portion of the computer industry now accounts for 70% of buying costs, while the hardware portion has declined to 30%.

Such a trend indicates the growing importance of research and development of the software sector. As costs tend to be high, there has been a concerted effort on the part of design engineers to "standardize" software. This has resulted in the current popular term, software "package". Like clothes bought off the rack, packages are general programs that can be used by different operators for different purposes. They are designed so that all that is required are some simple adjustments to suit the different service function. Some packages require no alterations at all. There are also "custom-made" programs that are designed by the soft house especially for the specific need of a particular operator. These can be compared to "tailor-made" garments.

The market for packages has grown in response to the development of "microcomputers", the smallest hardware systems on the market. These micro systems are best represented by the present flood of "personal" and "home" computers. Improvements in technology has seen the reduction of machine size but a continual growth in the number and complexity of machine functions. Home and personal computers are capable of an incredible number of functions ranging from such leisure-time activities as video games to such significant uses as providing teaching aids and home accounts systems. Therefore, with this unlimited market in potential computer users, the software portion of the industry has taken off, especially with the development of the package. This has resulted in the phenomenon of the "instant millionaires", those clever individuals who design special packages and patent their use. They understand the user's particular needs and therefore design a package and sell it. In many cases hardware and software companies have combined forces to design packages that require use of both the same company's hard and software. With the market increasing so rapidly many big companies are not always willing to develop into a certain area or they just do not have the time to devote to developing it. It is these areas, says University of Maryland professor Raymond Yeh that the smaller domestic software companies must tackle. By tapping this area they can carve out a successful niche for themselves.

Limited land and natural resources creates real problems for directing future industrial development of the nation's economy. This, however, is offset by a fabulous pool of human resources reflected in a highly educated population and proportionally high percentage of skilled engineers. In 1979 the Institute for Information Industry was formed. This organization was set up to direct the development of a domestic computer industry. There are now about 90 software companies in the Republic of China, with the majority being small-scale ventures. With this in light, the goal for development was directed at the domestic market. But with only a limited market at best, this does not bode well for continued future growth and expansion. Therefore the industry must look to develop an export market. The question therefore shifts to what aspect of the software industry should domestic producers pursue. Package production, while requiring lower research costs, would require large investments of advertising and market capital if companies wanted to crack the lucrative US market. At present the domestic companies are just too small to compete with the major American companies.

Custom-made packages seem less complicated but require high inputs of research and service capital. Companies would also have to set up branch offices abroad in order to attract customers and service the product.

So it seems to create a scenario that has the industry presently depending on the domestic market, but with limited profits there is not enough capital to venture into export markets. Still, experts feel that there is great potential for the future. The Ⅲ, in seeking out new ways to help develop the software industry in the Republic of China recently formed the MIC, an investigative organization which uses the services of the Arthur D. Little Advisory Company for all the latest news and information on the software industry and market. This organization acts as the eyes for the domestic industry in the lucrative American market. These eyes can help find a niche in the market, allowing domestic companies the opportunity to increase future development.

Paul J. S. Kao, chairman of the Software Industry Association of the Republic of China sums up the feeling for the future when he says that if the industry wants to reach its target of $700 million by 1989 it is most important to increase its strength. This increase in strength will only come through company amalgamations and joint cooperative ventures as well as with the assistance of the government. The recent joint venture, the Big Five, is indicative of this future potential.

(Gerald Hatherly)

[Picture Caption]

1. The machine hardware acts as the body of the computer while the software is its brain. To successfully operate the computer, there must be an integration of the two systems. 2. Professor Raymond Yeh (center), presently at the University of Maryland returned recently to take part in the 1984 International Computer Symposium held at Tamkang University. This gathering of Chinese and foreign scholars focused on the direction of development of the international and domestic software industry.

1. Director of the Electronics, Electrical and Information Industries Division, Industrial Development Bureau, Tieh-min Soong believes the software industry's most pressing goal should be to develop large-scale companies. 2. Nelson An-Ping Chang, president of the China Management System Corporation emphasizes software is an industry that requires an intensive fusion of high technological skill and capital investment.

1. The machine hardware acts as the body of the computer while the software is its brain. To successfully operate the computer, there must be an integration of the two systems.

2. Professor Raymond Yeh （center）, presently at the University of Maryland returned recently to take part in the 1984 International Computer Symposium held at Tamkang University. This gathering of Chinese and foreign scholars focused on the direction of development of the international and domestic software industry.

1. Director of the Electronics, Electrical and Information Industries Division, Industrial Development Bureau, Tieh-min Soong believes the software industry's most pressing goal should be to develop large-scale companies.

2. Nelson An-Ping Chang, president of the China Management System Corporation emphasizes software is an industry that requires an intensive fusion of high technological skill and capital investment.