Why am I saying SaaS is about to be commoditized?
This is not a random make-you-panic blog. No, not at all. It’s a reality that’s slowly creeping.
Ubiquity
Ubiquity. Remember that term? Those of you who have a background in computer science must’ve heard that term thrown around - the ubiquitous nature of computing. Anyway, same terminology can be used in relation to SaaS.
AI
For most people, AI is ChatGPT. I mean, valid. But that’s just the tip of the ice berg. ChatGPT is just but a chatbot. Well, not quite, it’s a multimodal AI that even does gen AI. To put it plainly, it supports other forms of media besides just plain text.
Agentic AI
If you’re catching my drift, you should’ve known by now what I’m alluding to with this blog. Agentic AI is AI that is “autonomous”, using that word lightly. Basically speaking, it can do things. Not just regurgitate text (cough cough ChatGPT).
Software engineering
For the most part, coding, software engineering/development, etc., is something that has been limited to people with the knowledge of programming and programming languages.
But that’s changing. Slowly (this is an understatement) but surely.
With the advent of AI, especially Agentic AI, the barriers to entry for developing software have gone increasingly down. Now you just need a wallet (for a monthly subscription) and reading/writing skills and some basics to prompt engineering (but even this won’t be as necessary…), and you can whip up “something”. Now it won’t be as polished, but it’s something.
Full Circle (History repeats itself)
In any industry/business, once the barriers to entry are lowered and any regular Joe can do what you do, the value for the product goes down.
This is where commoditization comes in. SaaS is no longer a novelty. After all, anybody can (will be able to) make SaaS. In fact, we already have too many SaaS apps for basically any problem conceivable. You want productivity apps, hey, just a quick Google search and you’ll basically find very many alternatives. There’s an alternative to your alternative, which was an alternative to a preference.
When commoditization happens, the market is flooded with a surplus.
Law of demand and supply
The market now has a surplus of SaaS products. Perhaps even more than the demand. And putting the law of demand and supply into play, when supply exceeds demand, the perceived value of the product goes down, and this inadvertently leads to the price going down.
Now SaaS developers will be playing a game of who can sell the same service for the cheapest. Sounds familiar?
The game is no longer about being unique, it’s about who can sell the lowest - and that’s not a game any entrepreneur wants to be playing. It’s a losing game.
Silver lining
Is there a silver lining to this? Why yes, we just might not see it yet. Same way the advent of the computer (or the industrial age) shook up very many industries/businesses, it also lead to innovation. It lead to something new, something novel.
Emerald, out!