Computer systems industry

Industry Snapshot

• GENERAL INDUSTRY: Information Technology
• CAREER CLUSTER: Information Technology
• SUBCATEGORY INDUSTRIES: Computer Disaster Recovery Services; Computer Facilities Management Services; Computer Software Installation Services; Computer Systems Design Services; Custom Computer Programming Services
• RELATED INDUSTRIES: Computer Hardware and Peripherals Industry; Computer Software Industry; Internet and Cyber Communications Industry
• ANNUAL DOMESTIC REVENUES: US$469.4 billion (Statista, 2024)
• ANNUAL GLOBAL REVENUES: US$486.5 trillion (Market Research, 2022)
• NAICS NUMBER: 5415

Summary

The computer systems industry provides goods and services designed to enhance the storage, manipulation, and transfer of digital data through computer networks. Such networks may exist within single buildings or other limited areas, constituting local area networks (LANs), or may span much larger areas or connect disparate, widely separated locations in the world, constituting wide area networks (WANs). In the vast majority of cases, the Internet provides the connection for these networks. The Internet has rapidly evolved from its beginnings in the late 1960s as a research project funded by the Department of Defense to become an indispensable tool for many types of businesses involved in electronic commerce (e-commerce). Along with this evolution of communication networks, there have been countless technological advances involving the physical components of computers and communications, called hardware, and the written computer code in programming languages, called software. These devices drive and facilitate the storage and communication systems—such as databases, webpages, and other interactive Internet information portals—that constitute computer systems. All these computer components are interrelated and compose the computer systems industry.

History of the Industry

It was during World War II that computers such as the Electronic Numerical Integrator and Computer (ENIAC), developed by John P. Eckert and John W. Mauchly, began to be used to help decide which enemy targets to bomb. To decide on a location, many factors needed to be considered, including any differences in height between the bomb launcher and the intended target, wind speeds, and the shapes of the bombs, which required a complex mathematical calculation involving several equations. Calculators had not been invented yet. Although the ENIAC was huge by present-day standards, using over twenty thousand vacuum tubes and filling entire rooms, this was the birth of the computer systems industry.

Throughout the 1940s and 1950s, computers continued to decrease in size while increasing in speed and capacity as a result of technological advances, such as the invention of the transistor in 1947 by John Bardeen, Walter Brattain, and William Shockley; magnetic ink character recognition (MICR), used by the banking industry to read checks; and the integrated circuit chip by Jack Kilby and Robert Noyce in 1958. During this time, the first useful high-level programming language, the IBM Mathematical Formula Translating System (or FORTRAN), was developed primarily for scientific applications. It was soon followed by the development of the second useful high-level programming language, the Common Business-Oriented Language (or COBOL), for business applications.

The application of computers to the banking industry gained importance, and in 1962, the first computer game was invented by Steve Russell at the Massachusetts Institute of Technology. In the 1960s, silicon microchips became available that allowed the large mainframe computers to decrease in size and led to their manufacture by many companies, including International Business Machines (IBM). The RAND Corporation developed a fully distributed, packet-switched network to facilitate military communication, and researchers at the National Physical Laboratory developed hardware to physically connect computers so that they could transmit digital information between them. Improvements in the hardware of these microcomputers throughout the 1970s led to their mass production, thus creating a rapid-growth segment of the computer industry.

Meanwhile, the linking of computers became available in 1969 with the creation of the Advanced Research Project Agency Network, or ARPANET, developed by the US Department of Defense. ARPANET originally linked the Stanford Research Institute with the University of California at Santa Barbara, the University of Utah, and the University of California, Los Angeles. It expanded to establish communication destinations, called nodes, at fifteen locations, including the National Aeronautics and Space Administration (NASA), the Massachusetts Institute of Technology (MIT), RAND Corporation, and Harvard.

In 1973, Bob Metcalfe invented Ethernet to allow multiple computers to share digital information and computer resources, such as printers and files, while he was working at Xerox. Two years later, Larry Roberts developed Telnet, which was the first commercial packet-switching network to link customers in seven cities. In 1979, Metcalfe left Xerox and persuaded the companies of Intel, Digital Equipment, and Xerox to promote Ethernet as an international standard for the computer industry, causing it to become the most widely installed LAN. Metcalfe later founded 3Com Corporation (acquired by HP in 2010). Numerous pieces of computer hardware were developed to facilitate Ethernet, and one of the most successful companies producing such hardware, Cisco Systems, shipped its first product in 1986. By 1990, Cisco achieved annual revenues of $69 million, and by 1998, these revenues had reached $8.46 billion. ARPANET was the predecessor of today’s Internet, and by 1993, the Internet was used to link WANs into a “network of networks,” which became known as the World Wide Web and was facilitated by the innovations of Tim Berners-Lee at MIT and Marc Andreessen at Netscape.

The Industry Today

Computer information systems generally complete tasks by using computer systems that can range from a single personal computer and its software to networks linking thousands of computers to share resources, including printers, Internet access, and databases. The computer systems industry led the way in establishing the digital economy because it has developed into a facilitator of business via the growth of e-commerce and of computer systems designed to support business objectives by facilitating communication and collaboration. Modern businesses use databases and computational abilities to improve decision-making and productivity, reduce costs, enhance customer relationships, and develop strategic applications. These strategic applications include online services for health care, insurance, banking, auctions, electronic payments, travel, and even online social networking websites and online dating sites that can earn money by selling advertising space.

The digital economy allows millions of users to communicate and conduct transactions involving graphics (including photographs, maps, and X-ray images), audio recordings (including music, audio books, podcasts, and lectures for online classes), videos (including television programs, films, and original material), and many types of computer software applications. In addition, Internet users can purchase nondigital goods and services, participate in online auctions, or gamble. The vast array of information, goods, and services available online caused search engines, allowing users to find what they are looking for online, to become increasingly important. The companies that develop these search engines grew significantly in the 2000s and 2010s, as did companies that optimize websites’ code to ensure that they appear near the top of search engine results, a field known as search engine optimization, or SEO.

Today, handheld devices allow workers to update inventory counts, print shelf tags anywhere within a store, and enter order information for out-of-stock items. Handheld devices are sometimes given to customers to provide information regarding price comparisons and recommended products. A cell-phone-sized portable device called a mobile manager facilitates communication and supervision of employees. Cart-mounted tablet personal computers (PCs) can allow customers to check prices while shopping, and employees can also use tablet PCs to communicate with one another and with managers wirelessly. Personal scanners or cart-mounted scanners are used in several grocery stores, including Food Lion and Amazon grocery. When a customer picks up an item, it is scanned before or while being placed into a shopping cart, and the final tally is generated when the customer is ready to check out.

The use of social media and social networking sites, such as Facebook, YouTube, and LinkedIn, grew from about 25 million people in 2000 to over 5 billion by the 2020s. This rise caused these companies, along with Google, Apple, and Yahoo!, to become major economic drivers, making the computer systems industry one of the few growth industries in the late 2000s and early 2010s. These companies lead the way in growth for health care, commerce, travel, politics, finance, and entertainment. Enterprise resource planning (ERP) and customer relationship management (CRM) combine business management tools with the technological tools of the computer systems industry to facilitate countless routine daily transactions, including banking, purchasing goods, and streaming content.

By 2008, the explosive growth of online businesses had resulted in approximately 1.5 million people employed in the computer systems industry. At the time, approximately 78 percent of companies within the computer systems industry employed fewer than five workers, making small companies a significant component of the industry. However, the majority of jobs were found within companies employing at least fifty employees. Many employees in the computer systems industry, including computer support specialists, programmers, consultants, and systems analysts, can work from home.

With the rise of e-commerce and social networking sites that allow users to share a great deal of personal information, there was an increase in identity theft and the need for network security systems to protect against hackers. Maintaining the security of computer systems became an important discipline, with several certificate programs emerging, including Security+, Red Hat, Network+, and Certified Network Associate (CNA) certifications. Some certificates are vendor-specific, such as the Cisco Certified Network Associate (CCNA) certification, while others are vendor-neutral, such as Security+ and CompTIA Linux+. Many other certificate programs exist for network administrators, database administrators, software engineers, and network engineers. These certificate programs are so important and widespread that they have developed into an industry of their own, with many opportunities for educators and trainers in various security, network, database, and software applications.

The computer systems industry could not function without specialized computer hardware that enables computers to communicate. Manufacturing such hardware is another area within the industry that saw explosive growth in the early twenty-first century, providing opportunities for employment to support the design, manufacture, and sales of constantly evolving computer hardware, as well as for electronic consumer gadgets. A network interface controller (NIC), sometimes called a network interface card, is a device that is inserted into a computer’s motherboard to provide the physical, electrical, and electronic connections to network media that allow various peripheral components to be attached electronically.

Traditionally, coaxial cable was used to connect several computers or other network nodes, including printers, to central communication devices called hubs. Companies in the industry also developed and manufactured additional hardware devices, such as switches, bridges, routers, and gateways to connect network segments. The Open Systems Interconnect (OSI) model was developed as a guideline for describing the protocols, or rules of communication, followed by various hardware manufacturers to ensure their products are compatible with the systems into which they are integrated. This model allows replacing one piece of equipment from one manufacturer with a similar piece from a different manufacturer. The model greatly facilitated the growth of the global computer systems industry. However, while some engineers assert the OSI model remains relevant in modern technology, like cloud computing, others argue the model is dated.

Industry Outlook

Overview

According to the Bureau of Labor Statistics (BLS), the computer and information technology occupations were among the fastest-growing industries in the United States throughout the 2010s and 2020s, and employment in this industry was projected to increase much faster than average between 2024 and 2034. Electronic commerce sales were $1.19 trillion in the United States in 2024 and were expected to increase by 11.82 percent in subsequent years.

High-speed Internet connections in the United States increased from more than 80 million connections in 2008 to 307 million in 2022, increasing the demand for the many peripherals and Internet connectivity devices that use such connections. By the mid-2020s, more than 91 percent of US households had access to the Internet. Wireless Internet connectivity also increased dramatically, driven by the proliferation of handheld computers and smartphones. These devices led to continual increases in both available positions and salaries within the computer systems industry.

As the Internet and e-commerce became increasingly important, businesses continued to increase their use of computer systems, including the latest technological advances that can be affordably purchased. Thus, the integration of new hardware, software, and communications tools will continue to drive the industry and will also increase the need for experts in network security and support services.

E-commerce depends on wireless technology to operate. Mobile devices such as smartphones continue to transform how companies and individuals communicate. These devices pose additional security problems, and much research and development is aimed at making wireless communications more secure. As the cost of mobile devices for consumers decreased over the early twenty-first century, e-commerce became increasingly availabilable and sales increased.

Various types of wireless devices found applications across industries, from health care to real estate to education. Webinar training gained popularity, and computer systems consulting jobs helped implement wireless devices in these industries. As technology continues evolving, industries also evolve, implementing revolutionary devices to improve efficiency, accuracy, speed, and more. Thus, the demand for computer and information systems managers, computer systems programmers, computer systems software engineers, computer systems analysts, computer scientists, computer systems support specialists, and computer systems administrators is expected to remain higher than average, according to the BLS.

Employment Advantages

Because all industries are becoming more dependent on computer information systems, employment opportunities within the computer systems industry are expected to continue to be excellent, especially for those with specialist certifications and higher levels of training. For example, the BLS projects that job opportunities for computer systems analysts will grow faster than the average for all occupations through 2034.

Because of the high demand for skilled workers, employees in this industry experience less gender and age bias, tend to have more lucrative benefit packages and salaries, and have greater potential for advancement. Typically, entry into the industry is less restrictive than in many other industries. Although most employees have either a bachelor’s or an associate’s degree in computer science, information technology, or information systems, job seekers can enter the computer systems industry with a degree in a different field, as long as they have the required job skills. There are many certification programs that represent these job skills and can substitute for a specific computer science degree. Thus, careers in the industry are potentially ideal for those seeking a career change.

Annual Earnings

According to Statista, the US computer systems industry earned revenues of around $469.4 billion in 2023. According to the BLS, the median salary for computer systems analysts in the United States was $103,790 in 2024. Earnings for various project managers with certifications tend to be higher. Computer and information systems managers earned a mean salary of $171,200, while computer network architects earned $130,390.

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