As AI Makes Software Cheaper to Build, Data and Distribution Become the Moat
Key PointsPalantir's ontology, CrowdStrike's security telemetry, and ServiceNow's workflow footprint would all be genuinely hard for a competitor to replicate.
As artificial intelligence continues to make software development more affordable, the key differentiators for companies are shifting towards data and distribution, creating a form of protection against disruption. Software companies are realizing that the valuable elements are not the code itself, but rather the proprietary data they have accumulated and the embedded position within their customers' operations.
This makes it difficult for competitors to replicate their success simply by building better AI. Salesforce, for instance, has introduced a new pricing model based on resolved customer service cases, acknowledging that charging per human seat is no longer practical when AI can perform those tasks. Palantir has developed ontologies, structured maps that link a company's data to its real-world operations, enabling AI agents to understand complex relationships.
CrowdStrike has amassed significant telemetry data across its customer base, making it challenging for competitors to match its level of security analysis. ServiceNow processes an enormous number of workflows annually, and businesses are unlikely to switch to a competitor due to the high switching costs. AppLovin leverages its advertising engine to gain a data advantage in determining which ads convert best.
Adobe is integrating its Firefly AI into its creative software, but the generative AI tools are making the raw act of creating images and video less unique. Both AppLovin and Adobe have valuable data assets, but they are reliant on external distribution platforms, which could be disrupted by larger companies. Salesforce offers per-resolution pricing, reflecting the shift in value from per-seat licenses to AI-based agents.
Snowflake's revenue growth rate is expected to decelerate as AI tools make data management easier and less dependent on the platform itself. These examples illustrate that while having a large customer base can provide protection against AI disruption, it may also be the very thing being disrupted.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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