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Why software stocks are getting pummelled

economist.com

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Re: Why software stocks are getting pummelled

#271

Post by marcus_holmes »

falloutx wrote: post #237
marcus_holmes wrote: post #190

Earlier quoted context omitted.

> I don't see anyone cooking up the next photoshop and selling it at $3/month. That's not the situation we're talking about though. It's someone saying "hmm, I need to edit this picture. Can I get ChatGPT to do it?" where 3 years ago they would have had to buy Photoshop and learn how to use it. Similarly, if they need a tool to batch-convert a thousand images, they're getting an LLM to construct the specific tool the…

ChatGPT cant do the precise photoshop tasks, not even close, infact the quality of output is worse than quality of input almost always. Ofc we live in this low quality internet now, so you may already be used to terribly edited images by AI. >You don't need a whole dev team to build a one-off tool for a specific job, which is probably 90% of the demand for those software products. LLMs are becoming the general-purpos…

> ChatGPT cant do the precise photoshop tasks, not even close, infact the quality of output is worse than quality of input almost always. Ofc we live in this low quality internet now, so you may already be used to terribly edited images by AI.

Again, for 90% of use cases it will be good enough. For the 10% of use cases where it's not, yes, they'll still need to buy and learn Photoshop.

> No, all of these tools have 90+% revenue coming from B2B sales, consumers dont buy software products anyway.

I don't know the exact market breakdown of Photoshop, but I suspect it's not 90%+ B2B corporate. And my point was that even then, most corporate users are not going to need the entire Photoshop feature set, they're using it for one or two tasks that could be done better by a bespoke tool.

> All of the software purchases are tax deductible so corporations buy even if they use very little of it.

This is true now, but will change once procurement and accounting departments realise that LLMs can replace most of it.

Re: Why software stocks are getting pummelled

#272

Post by bandrami »

DangitBobby wrote: post #254
bandrami wrote: post #209

Earlier quoted context omitted.

"Where is the output?" remains the giant elephant in the AI room. You can tell because people get mad when you ask that.

The output is good enough for your consumption (or internal consumption) but not good or general purpose enough to sell to anyone. Like DIY projects done by a new homeowner with access to YouTube.

Which generally make the home less valuable

Re: Why software stocks are getting pummelled

#273

Post by aurareturn »

rreichman wrote: post #261
aurareturn wrote: post #251

Earlier quoted context omitted.

AI-generated code still requires software engineers to build, test, debug, deploy, secure, monitor, be on-call, support, handle incidents, and so on. That's very expensive. It is much cheaper to pay a small monthly fee to a SaaS company. But it's also much cheaper to develop an alternative SaaS offering, one that is perhaps more custom, nimble, cheaper than the general SaaS out there today. In the past, maybe it migh…

Which part of Figma can you build with 20 engineers? I think we're still not close to a small team building real-time collaboration software at scale that actually works at the quality level that customers expect.

Probably all of it with a team of skilled engineers and a frontier model.

Re: Why software stocks are getting pummelled

#274

Post by Quiark »

charcircuit wrote: post #185
forgetfreeman wrote: post #82

Earlier quoted context omitted.

I also have pretty hefty skepticism that AI is going to magically account for the kinds of weird-ass edge cases that one encounters during a large data migration.

Just like coding the AI can reach out to a human for clarification on what to do.

yeah but it doesn't :)

Re: Why software stocks are getting pummelled

#275

Post by bagacrap »

nonethewiser wrote: post #69
grwbx wrote: post #26

What an odd article that is just designed to hype the software creation aspect, which doesn't really affect MAGAF. MSFT went down because of overexposure in AI and because it is clear that people do not want it. AI weariness is a thing, and if people go off the Internet or advertisers question whether humans or AI swarms are "watching" their ads it is over for the big players. Trying to salvage the situation by hypin…

Yeah the article doesn't make a lot of sense to me. Guess whose writing software with AI? Software companies. They mention sites like Base44 and Lovable. Sure, if tons of business was rotating out of software into no code AI solutions the article would have a point. But has a large portion of market cap moved out of AI into a few little no-code startups? Is Salesforce, Service Now, and SAP being replaced with no code…

FTA:

> dedicated software companies [...] are better at using AI to write code

Obviously public market capital cannot rotate into private companies (startups). However it has rotated into non-tech companies, i.e. the firms this article says some believe will benefit from cheaper alternatives/disruptors.

Re: Why software stocks are getting pummelled

#276

Post by forgetfreeman »

kube-system wrote: post #265
forgetfreeman wrote: post #228

Earlier quoted context omitted.

No, no I don't. I also remember what tech sales looked like in the 90s and aughts. Jokes about strippers and blow were a cliche for a reason.

Yeah, because they were in popular TV shows and movies.

And why was that, exactly?

Re: Why software stocks are getting pummelled

#277

Post by bagacrap »

AstroBen wrote: post #168

If I were confident it were AI as the cause I'd be seriously tempted to buy right now Take Adobe for example: they're getting pummeled and there's no way it's due to AI No-one's building an in-house Photoshop clone to replace them AI also isn't letting any competitors in. Geez if it were as easy as cloning their product you'd have a mile high mountain of VC money to fund it even pre-AI Code has never been much of a b…

Do you have a theory what the cause is then? The market moves and pundits write a story to match. There is no telling whether it's right or wrong.

Re: Why software stocks are getting pummelled

#280

Post by ethbr1 »

robocat wrote: post #268
ethbr1 wrote: post #243

Earlier quoted context omitted.

There are two forms of business software gen AI coding is 100% going to eat: 1. Simple CRUD apps 2. Long-tail / low-TAM apps Because neither of these make economic sense for commercial companies to develop targeted products for. Consequently, you got "bundled" generalized apps that sort of did what you wanted (GP's example) or fly-by-night one-off solutions that haven't been updated in decades. The more interesting q…

> I'd bet on in-housing I wouldn't. Knowing what to build is part that many businesses struggle with. As much as consultants are lambasted, my experience of companies is that they struggle to develop or maintain anything in-house - even where it should theoretically make economic sense. https://news.ycombinator.com/item?id=46864857

There would definitely need to be new positions / roles hired internally.

I imagine "vibe coder" will eventually coalesce with business requirements analyst, into a sort of "LOB developer-lite." I.e. every low-code products' undelivered citizen developer dream.

You need someone in the technical details and with some developer background (thinking through edge cases is a hard skill requirement), and you need someone with the process analysis and documentation skills (as well as the ability to push back / simplify requirements where it makes sense).

External developers/consultants are typically terrible at the requirements discovery and specification stage, because they're not embedded day-to-day with the business. Ergo, you get stupid feature decisions because someone left a sentence off a doc.

From your other comment, I think you're thinking about more complex / core / feature-rich solutions than I am. I agree those may remain SaaS / outsourced.

But there's no way in hell dirt-simple CRUD and "I am the only person in the world who has this need" solutions stay out of house.

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