The idea that AI is on the verge of disrupting the software industry has been making waves on Wall Street, with some investors worried that companies like Workday, Adobe, Salesforce, and Autodesk might struggle to compete with AI-coded apps. This concern, dubbed “The SaaSpocalypse,” has led to a decline in stock prices for these companies, with Workday down 35% year to date, Adobe down 26%, Salesforce down 25%, and Autodesk down 21%.
However, this concern may be premature, and possibly misguided. While AI will certainly change the software industry, it’s unlikely to replace human-coded software entirely. Block, the parent company of Square, recently announced that it’s terminating 40% of its employees, citing the potential for AI to allow a smaller team to accomplish more. However, this doesn’t necessarily mean that AI will replace human software developers. In fact, companies like IBM have significant resources and knowledge to throw at the challenge of AI, and may be able to use it to their advantage.
The software business is not just about writing code, but also about selling and supporting it. Enterprise customers value the ability to have “one throat to choke” – a single company responsible for delivering and supporting their software. This is something that AI startups may struggle to replicate. Additionally, people who use AI to write their own apps may develop a newfound appreciation for the value that software suppliers bring, such as security and data integrity. As Nvidia CEO Jensen Huang puts it, “You’re not going to lose your job to an AI, but you’re going to lose your job to someone who uses AI.” The same principle applies to software companies – they’re not going to be killed by AI, but by other companies that are better at seizing the opportunities it offers.
History has shown that software companies can adapt to technological change and thrive. For example, when Google launched its free productivity tools, many thought it would be the end of Microsoft Office. However, Microsoft was able to react skillfully and has since grown its Office revenue to $95 billion last year. Similarly, OpenAI, Anthropic, and other AI companies are not necessarily a threat to the existing software industry, but rather an opportunity for companies to innovate and grow. As the industry continues to evolve, it will be interesting to see how companies like Ring and other major players adapt to the changing landscape.
In conclusion, while AI will certainly have an impact on the software industry, it’s unlikely to replace human-coded software entirely. Companies that are able to adapt and innovate will be the ones that thrive in this new landscape. As the technology continues to evolve, it will be important to watch how companies like Microsoft, IBM, and Google navigate the changing landscape and find new opportunities for growth.
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