The output of Taiwan’s information and electronics industry was about US$188.6 billion last year, with the software industry only accounting for US$11.4 billion, or less than 6 percent. This ratio has not changed much over the past 10 years, and it is consistent with Taiwan’s image as a “hardware giant,” but a “software dwarf.” Various theories have attempted to explain the persisitent sluggishness of Taiwan’s software industry, one of the more convincing positing that the industry was never able to emulate the winning strategy of the hardware industry, which is designing and manufacturing globally competitive products. Although the software industry has