Demand for engineers trained in software development and applications has outstripped supply in Sweden (and many other industrial countries) in recent years. This is partly due to the phenomenal growth of embedded software in the industrial sector. Because ‘software’ is so often associated with computers and telecommunications only, and not with embedded software in industrial products, the economic growth of the latter is traced from 1981 to 1995 to show its importance. Sectors studied include computers, machinery, electronics, transportation equipment and telecommunications. While the computer industry accounted for about 75% of all Swedish software in 1981, in 1995 it only accounted for not quite 30%. The Swedish machinery, electronics and transportation equipment sectors combined accounted for more software production than the Swedish computer sector. The drivers of this development (ever larger and faster microprocessors) continue to form the future of high technology, which by definition consumes university-educated engineers and scientists at a high rate. The demands this puts on university technical education are not currently being met, either in terms of quantity or of content. Modern developments in software engineering may make it possible for engineering and science departments other than computer science and its equivalents to produce ‘microprocessor-compatible engineers’ who can develop and use software to solve engineering problems more efficiently and reliably than before. This new view of engineering education must be embedded in traditional engineering and science departments.