A vertical application or vertical market application, is software defined by requirements for a single, or narrowly defined, market. It contrasts with horizontal application.
An example of a vertical application is software that helps doctors manage patient records, insurance billing, etc. Software like this can be purchased off-the-shelf and used as-is, or the doctor can hire a consultant to modify the software to accommodate the needs of the doctor. The software is specifically designed to be used by any doctor's office, but would not be useful to any other entity.
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