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Commoditization of Software: The Rise of No-Code/Low-Code Solutions in a Saturated Market
Last updated: October 04, 2024 Read in fullscreen view
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In the mid-20th century, computers were largely unfamiliar to the public, but their commoditization has transformed access to technology, leading to widespread use in homes and workplaces. This shift is mirrored in the automotive industry, where electric vehicles and autonomous driving threaten to redefine cars as mere tools for transportation rather than artistic creations. Similarly, the software industry has experienced commoditization, exemplified by Microsoft Excel's democratization of spreadsheet tools. As AI and no-code technologies emerge, they are set to further disrupt the software market, making complex tasks accessible to non-technical users and solidifying software's status as a commodity.
Commoditization changed the landscape of computer hardware technology, but it also appears that software was affected. We'll examine the part no-code plays in that procedure, but first things first.
Firstly, what is a commodity?
A commodity is a resource or good for which samples are valued equally no matter who generates them. Commodities whose price is globally set and which have associated futures markets include basic agricultural staples like wheat and rice, mining materials like gold and silver, and oil. These goods are heavily traded. Varieties within a commodity may exist, but they are also precisely defined to the extent that they have distinct worldwide markets and prices.
Electric vehicles (EVs) and self-driving cars: Complete commercialization
The newest fashion in the car industry illustrates this very idea. With the latest developments, it is only appropriate to assume that automobiles soon will be a commodity, much like any other. Automobiles have been akin to works of art for well over a century. They are highly customizable, built on many different types of chassis that suit various applications, and are available with many degrees of luxury and interpretation of internal combustion. The first blow to the car as we knew it came with the arrival of electric vehicles: the characteristic torque curve was gone, as was the distinctive engine sound of internal combustion; driving an EV is quite comparable across all price categories.
It was actually because electric engine and battery technology were so well known that Croatian startup Rimac had a chance to compete with century-old businesses in the high-end sports car market, and Tesla could mushroom into a global automotive powerhouse in just a decade. Then there is apparently a second blow: that of autonomous driving against the idea of the car as an object of art. When Level 5 autonomous driving technology is realized, a car will become a tool for just one single task: transportation. It is here that the differentiation of the car business, which has made consumers strong advocates for certain brands and created petrolheads, would disappear.
Commoditization of the Software Industry: Modest Beginnings, Major Consequences
One could counter that this commoditization process has long since taken place in large parts of the software business. One of the trendsetters was Microsoft Excel, which significantly expanded spreadsheet tools' functionality and widely provided people with software power without requiring lots of expertise-a concept known to Gartner as "citizen access". Due to the fantastic success and subsequent commoditization of MS Excel, what at first started off as the democratization of the software went on to become, in people's minds, the spreadsheet program.
Naturally enough, commoditization drives down pricing, attracts new entrants, and decreases margins at the low end of the market. In that respect, it may be considered the "curse of success": the product becomes so successful and popular it becomes an industry standard and represents something bigger than itself, but doing so, it loses a large part of its revenue stream to competition. What was once a successful business strategy can no longer be sustained, since free online spreadsheet applications like Google Sheets started filling up that market niche that MS Excel created.
Two trends influencing the times we live in
The development of AI is bound to change the ways in which society, the economy, and the military work, and in ways that for now are unimaginable. But one thing is certain: AI-fueled software will disrupt the software market and accelerate software commoditization along the way.
In fact, for some period, programming assistants (APAs) programmed to learn from open-source material on the internet have assisted programmers. The recent development like this has raised a number of questions about who should be in control of code AI develops. AI is going to change how software is released and updated. And when customers have to choose between paying software companies large amounts of money to update software or use updates provided by AI, you can probably guess what they are going to do.
A second trend that is going to facilitate the commoditization of software is the increasing use of no-code technology. No-code technology, much like Microsoft Excel, will increase the ease of access for more and more people. It already stretches the limits of what a nontechnical user can do on his own using software, letting him complete activities that are increasingly complex.
With more power, people will be able to make apps for tasks hitherto only possible using expensive software. That is evidenced by the growth in development of no-code markets-especially enterprise categories. Of course, there will always be niches related to software which the general public cannot penetrate. But eventually, software will become so ubiquitous that the term commodity will appropriately apply to it.
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