Source: Fortune
Summary
Marc Andreessen’s 2011 essay “Why Software Is Eating The World” predicted software companies would take over large swathes of the industry. Fifteen years later, artificial intelligence is disrupting the software industry itself, leading to a $1 trillion market shock. Morgan Stanley’s software analysts argue that AI is expanding software’s capabilities, but also automating jobs, potentially reducing the number of software subscriptions needed. The rise of “do-it-yourself” software and “model providers” threatens traditional software vendors.
Our Reading
The numbers tell one story.
Morgan Stanley’s “gut check” on the software industry highlights the disruption caused by AI, with a 33% drop in stock multiples. The analysts see AI expanding software’s capabilities, but also automating jobs, potentially reducing the number of software subscriptions needed. Incumbent software vendors like Microsoft, Salesforce, and ServiceNow are seen as “Best Athletes” positioned to win, but the rise of “do-it-yourself” software and “model providers” threatens traditional software vendors. The industry is facing a “Trinity of Software Fears” that cuts to the fundamental questioning of the software business model.
The software industry is eating its own lunch.
Author: Evan Null
