[btilly]

If you go to the bottom end, I suspect that there are a lot more 1 man consulting shops than 1 man software development shops. Yes, there are a lot of app developers out tere (a new phenomena that you didn't see much of 10 years ago), but there are a ton of people who do contract work for companies with one-off needs. Software that typically never is seen outside of the organization that asked for it.

As for the top end, Microsoft is a monster. But their model has not proven replicable by anyone else.

The ascendancy of consulting over software sales is also rooted in history. The first pure software company was the Computer Usage Company, in 1955. They were a consultancy. So was every other software company that followed for a decade. It was not until 1965 that Applied Data Research offered AUTOFLOW for sale. (The company was predominantly a consultancy.) And it was not until they filed a lawsuit that forced IBM to unbundle software from hardware that the industry as a whole accepted that software was something that could be sold. (Previously you bought hardware and software came with it.)