The term “software industry” encourages people to imagine that software is always developed by a sort of factory and then delivered to consumers. The free software community shows this is not the case. Software businesses exist, and various businesses develop free and/or non-free software, but those that develop free software are not like factories.
The term “industry” is being used as propaganda by advocates of software patents. They call software development “industry” and then try to argue that this means it should be subject to patent monopolies. The European Parliament, rejecting software patents in 2003, voted to define “industry” as “automated production of material goods”.