Software-mageddon is here. As IBM and ServiceNow slip up, the market is asking if we still need SaaS in an AI agent world?
If the semiconductor boom is a gold rush, the traditional software industry just realized it’s the one selling the shovels. And the miners just found a way to manifest gold out of thin air.
On Thursday, the “software-mageddon” narrative went from a whisper to a scream.
Despite IBM and ServiceNow reporting numbers that technically beat analyst estimates, their stocks took a nosedive. IBM’s shares slid over 7% after growth in its Red Hat unit (usually the company’s crown jewel) stuttered. ServiceNow didn’t fare much better, flagging subscription hits and geopolitical friction.
But look past the spreadsheets, and the real story is much more existential.
Investors are no longer buying the “we have an AI story” pitch. They’re looking at the $1 trillion in market value that has evaporated from the software sector since January and asking a brutal question: In a world of autonomous AI agents, do we even need your software anymore?
The Anthropic effect is looming large here.
When Anthropic launched tools earlier this year that could automate complex data analytics and even modernize COBOL code, it directly threatened the sticky enterprise relationships companies like IBM have relied on for decades.
Why pay for a massive subscription to a platform that manages your workflows when an AI agent can do the work across your existing systems?
We are witnessing a violent rotation in the market.
The money is flowing out of “Software-as-a-Service” and into “Intelligence-as-a-Service.” If you make the chips (Nvidia, Texas Instruments), you’re winning. But if you’re a mid-level software giant whose business model relies on charging “per-seat” for a tool that humans use, you’re in the crosshairs.
The nuance is that software isn’t “dead”. But it has been demoted from the platform to the plumbing. The value is shifting from the interface to the inference. As one analyst put it, the challenge has moved from having an AI story to proving AI returns. If your software is just a mediator between a human and a task, your days are numbered.
The build era is enroute to changing what we’re willing to pay for- if not design in itself.
