On August 20, 2011, venture capitalist Marc Andreessen ignited a pivotal conversation in the tech industry with his blog post and Wall Street Journal essay titled “Why Software Is Eating the World.” He highlighted a sweeping shift in the global economy driven by technological advances, predicting that software companies would come to dominate various industries. Fast forward to February 2026, and Andreessen’s vision has taken on an unexpected trajectory as software—as he foresaw—has indeed transformed sectors like retail, video streaming, and telecommunications. However, the emergence of artificial intelligence (AI) has introduced unforeseen challenges to the software landscape itself.
Morgan Stanley’s software analysts, led by Keith Weiss, recently characterized the current moment as a “gut check,” asserting that while AI qualifies as a form of software, it poses existential questions about the very foundations of the software business model. The firm’s research has revealed a massive selloff amounting to over $1 trillion, termed the “SaaSpocalypse,” which signals that software’s dominance might itself be at risk.
Reflecting on Andreessen’s original insights, it’s crucial to grasp the skepticism he faced in 2011. The aftermath of the dotcom crash had left investors wary, yet Andreessen championed companies like Amazon and Netflix, demystifying their potential as substantial, high-margin businesses. He foresaw a digital economy where traditional retail and media would be reshaped, thereby laying the groundwork for a monumental shift characterized by “creative destruction.” Over the following years, software firms thrived, driving a wave of new value creation and displacing legacy companies.
Today, however, a new shift is underway as AI grows ever more capable of automating tasks that once required human input. The analysts at Morgan Stanley caution that generative AI could redefine roles and responsibilities within organizations, effectively enabling software to process unstructured data—emails, reports, verbal communications—without human intervention. This paradigm shift potentially jeopardizes conventional software companies, which could see a decrease in subscription revenue as workplaces adapt to this burgeoning automation.
Amid this transformation, a rising trend is the democratization of software creation, often referred to as “vibe coding.” This practice empowers users to quickly generate code through AI tools, concerning traditional software vendors. The notion of “model providers” also poses a threat, as AI could transform how enterprises operate by serving as comprehensive interfaces that integrate tools and data, thereby rendering established applications obsolete.
Despite these challenges, some analysts argue that the market’s current apprehension may be exaggerated. They draw parallels to Andreessen’s earlier assertions that the intrinsic value of technology often goes overlooked. Companies like Microsoft, Salesforce, and ServiceNow are adapting, evolving into agile players in the age of generative AI. Notably, Salesforce has reported a remarkable 114% year-over-year increase in AI-related recurring revenue, showcasing that incumbents can pivot and thrive amid disruption.
Taking a broader view, the path forward may resemble familiar trajectories of innovation, albeit at an accelerated pace due to advances in technology. While the software sector faces headwinds, parallels can be drawn to the boom in cloud computing a decade ago, with industry valuations still elevated compared to pre-cloud levels.
In another take on the evolving landscape, Andreessen’s firm has released new thought leadership, dismissing notions of a “death of software.” They argue instead for a future where software demand continues unabated but is driven by new tools and methods of production. While the ability to create software may become more widespread, it also poses risks for established companies who may not survive this intense period of “creative destruction.”
As Andreessen noted in 2011, the software revolution holds significant potential for the American economy, yet it also carries the weight of severe disruption for workers in traditional roles. Today, as industries grapple with the implications of AI, the economic landscape may witness a disjunction where productivity and GDP could rise without a corresponding need for human labor. Experts, including those from Oxford Economics, warn of an imminent phase where job creation may decouple from economic growth.
In summary, the landscape of software is undergoing a profound transformation. The advent of AI has ignited a dual-edged sword: while it promises to enhance productivity and redefine the nature of work, it also raises critical questions about the future of employment in an increasingly automated world. As companies and workers navigate this new reality, the balance between technological progress and human labor will shape the economic fabric of the future.
