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An independent software vendor (ISV) is a company that develops and sells software products that run on, or integrate with, platforms, operating systems or hardware supplied by other companies. It describes a company’s business role. It says nothing about how the software is delivered, so an ISV can sell subscriptions, term licenses or perpetual licenses.
How the major platform companies define an ISV
The three main official explainers agree on the core idea and differ in emphasis.
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- AWS: “An independent software vendor (ISV) is a company that creates and sells software products to suit a range of customers.” Its examples include software for managing sales or financial data, and infrastructure software for storage, security and authentication. It adds that ISV products may work with different hardware and operating systems. (AWS: What Is an ISV?)
- Microsoft: “ISV stands for independent software vendor, a company that develops and sells software solutions independently of hardware manufacturers.” Microsoft stresses that the products are designed to run on other vendors’ platforms, and it separates ISVs from VARs, OEMs and general software development companies. (Microsoft: What is an ISV?)
- IBM: “An independent software vendor (ISV) is a company that develops, markets and sells software applications designed to run on existing third-party hardware platforms and operating systems.” IBM’s wording puts compatibility with the underlying platform first. (IBM Think: What is an ISV?)
The sources reviewed give no attributable market-size or adoption figure for ISVs, so none is quoted here.
What “independent” means
“Independent” is relative to the platform or hardware maker. The ISV owns and sells its own product, and that product is not tied to one hardware manufacturer. It does not mean the company works alone. ISVs commonly have close commercial ties to the platforms they build on, including partner programs and co-selling arrangements.
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ISV vs. SaaS: vendor type vs. delivery model
This is the most common confusion. “ISV” describes the kind of company. “SaaS” describes how software reaches customers, as a hosted service. A company can be both: a firm selling a cloud subscription it built itself is an ISV and a SaaS provider. A company that sells installable software under a perpetual license is an ISV but not SaaS. AWS and IBM both list perpetual licenses, term agreements and SaaS as models an ISV may use.
ISV compared with similar terms
| Term | Useful distinction |
|---|---|
| ISV | Develops and sells its own software product, often for many customers and across platforms. |
| SaaS provider | Delivers software as a cloud service. It may also be an ISV, because one term describes the vendor and the other the delivery. |
| VAR (value-added reseller) | Resells another company’s product and adds value through services, customization or related work. |
| OEM / hardware manufacturer | Makes hardware and may bundle software closely tied to it. This differs from a company whose business is the software product. |
| Custom software development company | Builds, deploys and supports software for specific clients. It need not sell a reusable product. |
Sources: AWS and Microsoft explainers linked above.
A practical test for classifying a company
These four questions are a working shortcut drawn from the definitions above, not an official standard:
- What does it sell? A software product points to an ISV. Billable development hours point to a services firm.
- Does it own or license a reusable product? One product sold to many customers is the ISV pattern. A one-off build for a single client is not.
- Who is the software for? ISV products usually target a problem, market segment or industry.
- How tied is it to another company’s platform or hardware? Running on, or integrating with, someone else’s platform is the “independent” part of the label.
Licensing and business models
AWS lists perpetual licenses, term agreements and pay-as-you-go SaaS as possible arrangements. In each, the ISV retains ownership and customers receive licensed rights to use the software. Responsibility for maintenance, security and support depends on the contract terms. IBM names the same three models. Ownership, support duties, renewal and usage rights vary by agreement, so do not assume every ISV works the same way.
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How ISVs reach customers
AWS says ISVs can distribute through partnerships, advertising and cloud marketplaces. AWS Marketplace documentation lists software categories such as security, networking, storage, machine learning, IoT, business intelligence, databases and DevOps, and identifies ISVs as one type of seller (AWS Marketplace buyer guide). Microsoft describes its AI Cloud Partner Program and ISV Success offering as resources for partners building software on Microsoft Cloud. Eligibility and benefits for these programs change, so check the provider’s current pages.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Narrower, platform-specific definitions
Some contexts define ISV more tightly. The AWS Marketplace glossary frames ISVs by software that runs on or integrates with AWS services (AWS Marketplace glossary). A historical U.S. Department of Justice page on the Microsoft antitrust settlement reproduces a Microsoft-specific definition. It covers entities other than Microsoft that develop and license or market software products intended to interoperate with Microsoft platform software (U.S. DOJ, Microsoft Tunney Act comment project). That wording is tied to a U.S. consent decree and one platform, so it is not the general present-day definition.
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