Enterprises Are Shunning Vendors in Favor of DIY Approach To AI, UBS Says
(Wednesday April 09, 2025 @05:15AM (msmash)
from the closer-look dept.)
- Reference: 0176983199
- News link: https://slashdot.org/story/25/04/09/0912235/enterprises-are-shunning-vendors-in-favor-of-diy-approach-to-ai-ubs-says
- Source link:
Established software companies hoping to ride the AI wave are facing a stiff headwind: many of their potential customers are building AI tools themselves. This do-it-yourself approach is channeling billions in spending towards cloud computing providers but leaving traditional software vendors struggling to capitalize, complicating their AI growth plans.
Cloud platforms like Microsoft Azure and Amazon Web Services are pulling in an estimated $22 billion from AI services, with Azure alone capturing $11.3 billion. Yet, software application vendors have collectively garnered only about $2 billion from selling AI products. Stripping out Microsoft's popular Copilot tools, that figure drops to a mere $450 million across all other vendors combined.
Why are companies choosing the harder path of building? Feedback gathered by UBS points to several key factors driving this "persistent DIY trend." Many business uses for AI are highly specific or narrow, making generic software unsuitable. Off-the-shelf AI products are often considered too expensive, and crucially, the essential ingredients -- powerful AI models, cloud computing access, and the company's own data -- are increasingly available directly, lessening the need for traditional software packages.
Cloud platforms like Microsoft Azure and Amazon Web Services are pulling in an estimated $22 billion from AI services, with Azure alone capturing $11.3 billion. Yet, software application vendors have collectively garnered only about $2 billion from selling AI products. Stripping out Microsoft's popular Copilot tools, that figure drops to a mere $450 million across all other vendors combined.
Why are companies choosing the harder path of building? Feedback gathered by UBS points to several key factors driving this "persistent DIY trend." Many business uses for AI are highly specific or narrow, making generic software unsuitable. Off-the-shelf AI products are often considered too expensive, and crucially, the essential ingredients -- powerful AI models, cloud computing access, and the company's own data -- are increasingly available directly, lessening the need for traditional software packages.