The value of software is approaching $0
InfoWorld ·
Imagine a vendor comes to you and explains how they can dramatically de-risk your infrastructure. They have a new software product or SaaS that detects everything that has bitten you in the past, as if by magic. However, it isn’t magic; they explain exactly how it works, not every detail, but enough to make you believe it will work. There is a bill, of course. It will be, say, $100k a year to scale to whatever the size of your business is, but more importantly, it’s a vendor in your primary data or software supply chain. This could be really important to your business. Do you A) spend months to a year working through your procurement process, working with the vendor, and working with your infosec team to finally get this product installed and billed to your budget? Or do you B) feed the vendor’s description to Claude to make the software for you and ghost the vendor? This was an ethics test, not to see whether you would do B, but whether you’re a liar, because of course you would. Everyone would. Who wants that headache or that bill? I don’t want to talk to the security team! No one wants to talk to them! That’s why they are kept in the dungeon. The bottom line is that in the present or near future there is only one defensible business model left in software. I can haz Photoshop? Recently, someone claimed to have fed the Adobe suite into their LLM and replicated most of Photoshop in Rust . You can find the repository here . They claim they didn’t reverse engineer it, and I believe them, because if they had, Adobe would have the repo down by now. What followed was essentially an AI code-generation edition of overclaiming and underdelivering. They claimed 82% parity with Photoshop, and then, based on the bug reports (not just the number but what is in there) we can conclude two things. First, everyone wants to see Adobe hoisted by its own petard. Second, the software was nowhere near 82% parity. However, look at the pull requests. I give it another week or two before LLMs and the network effect close the gap. I hang with a group of LLM enthusiasts on Discord. We’re not the “oh it’s all amazing” types but people who have been building with AI for two years and burning our fingers. However, something that we, Satya Nadella , and others have been saying for some time now is that software is approaching the value of $0. If I can feed specs into a frontier model and get a half-way functioning replica, then why am I going to buy something, especially now that the industry has moved to subscriptions? I admit, I live in an echo chamber of early adopters . I started using LLMs for everything from marketing and video generation to entire codebases (including Pac-Man in 3D from Pac-Man’s perspective), long before they did any of it particularly well. I realize adoption isn’t evenly distributed. Many of you may still be using Cursor and reviewing each change or even just using autocompletion. If that’s you, you’re shaking your head, thinking I’m daft, but if you’ve been generating for a while, you’ve seen the shift from stub machine to one-shotting pull requests. The network is the computer But I must be daft, right? Me and Satya. Except not only are models getting better, but they’re also getting more efficient. Right now I don’t regenerate macOS to get rid of its annoying limitations because it would use too many tokens. However, Claude Opus 4.6 was the frontier model eight months ago; Qwen3.8-27B now beats it on most of the coding and agent benchmarks they share , and Qwen runs on a single local workstation. Assume that in a short while my only reason not to regenerate macOS will be because I can’t be bothered to deal with the driver and firmware updates. Assume it will cost me maybe three months of inference on local hardware (and then Apple’s stingy need to control how many macOS VMs I’m running will be moot). If the value of software turns to $0, then what is the motivator and business model for the software industry? Why won’t it just collapse into ChatGPT? There is only one business model left: aggregation. Meaning, if I get the same value from you as your sole customer vs. your 100,000,001st customer, then the software is of zero value. If an LLM can’t reproduce your software now, then another model will three months from now. The value must be mutual. You’re aggregating my data and processes or whatever; as the customer, I must get value from all the other data and processes you aggregate. That’s why SaaS isn’t dead; the future of software is social and collective. Running that is SaaS. The rest will be open source or prompts. So, as software developers or entrepreneurs, we are left with Sun Microsystems’ slogan: the network is the computer. The question for any software you produce for financial gain is, “What is the network effect?” Meaning, how will each user benefit other users by using your software? If your software doesn’t have a network effect, there is no reason to pay you; I’ll make my own. Without a network effect, every one of your customers is the last user on Facebook after all their friends have left. It is no wonder those customers ghost you for Claude.
Imagine a vendor comes to you and explains how they can dramatically de-risk your infrastructure. They have a new software product or SaaS that detects everything that has bitten you in the past, as if by magic. However, it isn’t magic; they explain exactly how it works, not every detail, but enough to make you believe it will work. There is a bill, of course. It will be, say, $100k a year to scale to whatever the size of your business is, but more importantly, it’s a vendor in your primary data or software supply chain. This could be really important to your business. Do you A) spend months to a year working through your procurement process, working with the vendor, and working with your infosec team to finally get this product installed and billed to your budget? Or do you B) feed the vendor’s description to Claude to make the software for you and ghost the vendor? This was an ethics test, not to see whether you would do B, but whether you’re a liar, because of course you would. Everyone would. Who wants that headache or that bill? I don’t want to talk to the security team! No one wants to talk to them! That’s why they are kept in the dungeon. The bottom line is that in the present or near future there is only one defensible business model left in software. I can haz Photoshop? Recently, someone claimed to have fed the Adobe suite into their LLM and replicated most of Photoshop in Rust . You can find the repository here . They claim they didn’t reverse engineer it, and I believe them, because if they had, Adobe would have the repo down by now. What followed was essentially an AI code-generation edition of overclaiming and underdelivering. They claimed 82% parity with Photoshop, and then, based on the bug reports (not just the number but what is in there) we can conclude two things. First, everyone wants to see Adobe hoisted by its own petard. Second, the software was nowhere near 82% parity. However, look at the pull requests. I give it another week or two before LLMs and the network effect close the gap. I hang with a group of LLM enthusiasts on Discord. We’re not the “oh it’s all amazing” types but people who have been building with AI for two years and burning our fingers. However, something that we, Satya Nadella , and others have been saying for some time now is that software is approaching the value of $0. If I can feed specs into a frontier model and get a half-way functioning replica, then why am I going to buy something, especially now that the industry has moved to subscriptions? I admit, I live in an echo chamber of early adopters . I started using LLMs for everything from marketing and video generation to entire codebases (including Pac-Man in 3D from Pac-Man’s perspective), long before they did any of it particularly well. I realize adoption isn’t evenly distributed. Many of you may still be using Cursor and reviewing each change or even just using autocompletion. If that’s you, you’re shaking your head, thinking I’m daft, but if you’ve been generating for a while, you’ve seen the shift from stub machine to one-shotting pull requests. The network is the computer But I must be daft, right? Me and Satya. Except not only are models getting better, but they’re also getting more efficient. Right now I don’t regenerate macOS to get rid of its annoying limitations because it would use too many tokens. However, Claude Opus 4.6 was the frontier model eight months ago; Qwen3.8-27B now beats it on most of the coding and agent benchmarks they share , and Qwen runs on a single local workstation. Assume that in a short while my only reason not to regenerate macOS will be because I can’t be bothered to deal with the driver and firmware updates. Assume it will cost me maybe three months of inference on local hardware (and then Apple’s stingy need to control how many macOS VMs I’m running will be moot). If the value of software turns to $0, then what is the motivator and business model for the software industry? Why won’t it just collapse into ChatGPT? There is only one business model left: aggregation. Meaning, if I get the same value from you as your sole customer vs. your 100,000,001st customer, then the software is of zero value. If an LLM can’t reproduce your software now, then another model will three months from now. The value must be mutual. You’re aggregating my data and processes or whatever; as the customer, I must get value from all the other data and processes you aggregate. That’s why SaaS isn’t dead; the future of software is social and collective. Running that is SaaS. The rest will be open source or prompts. So, as software developers or entrepreneurs, we are left with Sun Microsystems’ slogan: the network is the computer. The question for any software you produce for financial gain is, “What is the network effect?” Meaning, how will each user benefit other users by using your software? If your software doesn’t have a network effect, there is no reason to pay you; I’ll make my own. Without a network effect, every one of your customers is the last user on Facebook after all their friends have left. It is no wonder those customers ghost you for Claude.