I've heard that the term firmware comes from it being between hardware and software. I have also heard that it refers to software that comes from the firm (company) that builds the hardware.
When was the term first used and what is the origin of the term?
From Wikipedia:
The term "firmware" was coined by Ascher Opler in a 1967 Datamation article. Originally, it meant the microcode – contents of a writable control store (a specialized small area of RAM memory), which defined and implemented the computer's instruction set....Firmware has evolved to mean almost any programmable content of a hardware device, not only machine code for a processor, but also configurations and data for application-specific integrated circuits (ASICs), programmable logic devices, etc.