My skilled profession has spanned six main tech adjustments: minicomputer, PC, web, social, cell, and cloud. Every of those revolutions introduced a wave of latest suppliers and destroyed swaths of legacy corporations. Now comes the Seventh Wave of main tech change, pushed by AI in its fashionable varieties – generative and agentic.
Within the ’80s and ’90s, when confronted with a brand new wave, the legacy tech corporations would freeze within the headlights or double down on their abruptly out of date enterprise fashions. This allowed new gamers to realize traction and redefine industries. So the mainframe gamers largely crumbled within the face of minicomputers, and the minicomputer business was decimated by the PC. Executives again then weren’t learning-mindset thinkers, and so they defaulted to stonewalling after which responding, however too late. Sure, Wang Laboratories and Digital Gear did construct PCs, however the brand new market had already been fashioned. Schumpeterian artistic destruction held court docket.
Then got here Clay Christensen and “The Innovator’s Dilemma” – a guide that succinctly acknowledged how legacy corporations get caught of their previous costly enterprise mannequin and are bypassed by low-cost newcomers. The incumbents defend the fort till the fort is nugatory (cliche cf. Kodak).
The brand new tech guard learn Christensen’s guide. Beginning across the flip of the millennium, they started to deploy 4 legacy defensive methods when confronted with a paradigm change: 1) Purchase the interlopers (cf. Instagram, WhatsApp); 2) Block the brand new wave with regulation, pricing, packaging, consortia, and partnerships (cf. Partnership on AI); 3) Fake that you’re a part of the brand new period (cf. Agentforce); and 4) Hyperlink present dominant merchandise with new choices to maintain challengers at bay (cf. embedding Copilot in Workplace). These methods usually are not all the time profitable, however they’re far more practical than the previous “deny and die” stance of the earlier era of executives.
Will these methods work for the legacy tech corporations because the AI revolution intensifies? Right here’s my tackle what lies forward.
The Enterprise Software program Enterprise
Earlier than AI ever confirmed up, this tech sector had three issues:
-
Publish-COVID, there have been drastic worth will increase, irritating consumers and stretching person budgets. The VMware/Broadcom mess is the poster boy of this dynamic.
-
The fantastic thing about the software program enterprise for buyers (as soon as consumers are in, they’ll’t get out) is ugly for customers. They really feel trapped and exploited – it’s not a sq. deal.
-
For CEOs who search agility and adaptableness of their companies, enterprise software program is usually seen as an inhibitor of change and an ossifier of outmoded enterprise course of. Rigid programs of report have made it troublesome for corporations to construct programs of engagement for more and more extra demanding clients.
In opposition to this bitter backdrop comes AI, which presents three threats to the software program business:
-
Low-cost code. TuringBots, utilizing generative AI to create software program, threatens the low-code/no-code gamers.
-
Low-cost substitute. Software program programs, be they CRM or ERP, are structured databases – repositories for shopper information or monetary information. Generative AI, coupled with agentic AI, holds out the promise of a brand new method to handle this knowledge, opening the door to an enterprising era of tech corporations that can supply AI CRM, AI financials, AI database, AI logistics, and so on. These programs supply the promise of being way more adaptable and learning-focused, in addition to being straightforward to deploy and with a decrease price to deploy.
-
Higher performance. AI-native programs will regularly study and flex and adapt with out hundreds of thousands of {dollars} of consulting and customization. They maintain the promise of being updated and all the time able to tackle new enterprise issues and challenges with out rebuilds. When the enterprise and course of adjustments, the tech will study and alter.
Will consumers hear to those pitches? CEOs and enterprise leaders definitely will – they’re determined for extra agility. However growth staffs and CIOs who’ve staked their careers and talent units on legacy programs will resist. Enterprise is able to transfer on; know-how groups will drag their toes.
So, the enterprise software program enterprise gained’t change rapidly, particularly because the incumbents deploy their typical arsenal of weapons to defend their positions – Purchase, Block, Fake, and Hyperlink. However the promise of AI computing goes to make this previous vs. new battle very hard-fought.
The Affect on Different Tech Sectors
Whereas software program will probably be most modified by AI, there will probably be an impression throughout the breadth of the business.
AI wants cycles, so the {hardware} section will get a really large increase from this wave. Sure, there will probably be a transition away from CPUs to GPUs, and the NVIDIA stranglehold will take one other 12 to fifteen months to interrupt, however programs from cloud to laptops will probably be vastly stimulated by this variation. Count on this enterprise to develop within the 8–10% vary per 12 months over the following 5 years.
Know-how companies, which have been below large strain since 2023 as a consequence of overexpansion within the 2021–2022 timeframe, will expertise whiplash from AI. On one hand, the legacy software program programs that PwC, Deloitte, and others have applied for many years and that comprise a lot of their experience will probably be challenged within the brief time period and shrink in the long run. Concurrently, there will probably be a large demand for experience in AI. Cognizant, Capgemini, and others will probably be known as on to assist corporations implement AI computing programs and migrate away from legacy distributors. Forrester believes that the tech companies sector will develop by 3.6% in 2025. I imagine that the speed may improve to five–6% per 12 months from 2026 to 2030, pushed by AI.
Forrester has telecommunication and communications tools rising 1.5% and 0.8% globally in 2025. These progress charges may very well be doubled within the upcoming years by the motion of prompts and solutions between customers and AI knowledge facilities. Sure, there will probably be good distilled programs sitting on laptops and in edge computing, however no less than 70% of AI computing will run off non-public and public clouds. The Seventh Wave would require and stimulate communications, community investments, and infrastructure.
The Cool Youngsters
How will AI impression the Large 5 shopper tech corporations?
Alphabet/Google. Listed search is dying, and Google is struggling to reformulate its promoting enterprise to function within the Seventh Wave. Promoting is like Keith Richards and cockroaches: It’s going to by no means go away – it evolves and persists. So sure, the surveillance enterprise mannequin will probably be recreated within the AI world and Google will pull out all stops to retain a portion of its hegemony in that area. Search for Alphabet to deploy the Purchase and Hyperlink defensive methods – vacuuming up promising AI promoting startups and providing discounting and packaging offers to extant search clients that need to experiment with the Google AI promoting platform. Three benefits that the corporate will try and leverage are its cloud place, in depth coaching knowledge, and its deep experience in generative (do not forget that Google invented the transformers that make this know-how attainable).
Meta/Fb. The photographs and knowledge that customers dump into Fb each day give Meta an enormous coaching benefit. And Meta AI, as a result of it’s embedded in Fb (and different properties), has over one billion customers – greater than every other massive language mannequin (LLM). However the firm’s platform will probably be challenged by newcomers introducing AI social options that can steal customers and reformulate the principles of social media – bringing larger belief, sooner studying, escape from the Fb algorithm, higher summarizing of each day and weekly content material, and higher automated moderation. Count on Meta to make use of all 4 defensive methods to defend its citadel – with an emphasis on linking its present promoting choices to stop advertisers from migrating to new AI platforms. The “transfer quick and break issues” tradition at Meta will engender a very chaotic and at instances determined posture because it subordinates buyer pursuits in favor of gaining strategic excessive floor within the new period.
Amazon. Because the Seventh Wave e-commerce world emerges, Amazon will use its hyperdominant retail and cloud place to try to aggressively field out challengers. AI commerce will bypass the net in favor of direct-to-consumer apps and hyperpersonalization, however anticipate Amazon to try to out of date itself and lead that revolution. Search for the corporate to deploy the Purchase, Block, and Hyperlink methods within the face of challengers and, most significantly, to make use of its dominance in cloud to finance progressive forays into new AI floor.
Microsoft. Coupling its robust positions in cloud and software program, Microsoft will do effectively within the new world, with the specter of “Microsoft fatigue” the one actual issue that might impede its Seventh Wave prospects. The corporate has already deployed its Purchase and Block technique, taking a big place in OpenAI (Purchase) and interesting in partnerships (Block) to freeze out newcomers. Microsoft’s management is as fanatical as Meta’s in its dedication to not fall into the Innovator’s Dilemma. So look ahead to seemingly irrational conduct and erratic tactical strikes, as management is unafraid to confuse clients and take outsized capital dangers.
Apple. An AI telephone? Apple is clearly the largest AI laggard of the cool tech youngsters. Complicated software program shouldn’t be the corporate’s forte, so it’s weak, as has been evident in its AI fumbling (cf. Apple Images). Tim Cook dinner goes to have to make use of the corporate’s large money hoard to purchase its manner into AI as its inside efforts fail to generate satisfactory innovation. I’d watch this area for a really massive deal to amass one of many impartial LLM corporations corresponding to Mistral or Anthropic.
Conclusion
Tech CEOs, from Satya Nadella to Marc Benioff to Sundar Pichai, are scrambling. Their services are about to be challenged by a brand new method to do work, and they’re decided to not be swept away (or be made zombies) within the Seventh Wave.
Will probably be a very good time for the incumbents to deploy the Purchase, Block, Fake, and Hyperlink methods, as the present administration in Washington will seemingly loosen antitrust oversight. However given the primary six months of this administration, there could also be extra unpredictability than anticipated on that entrance.
One other issue that might assist the legacy gamers is the state of the non-public fairness and enterprise markets. They’re presently holding many illiquid belongings (corporations) from the pre-AI interval – they must promote these depreciated belongings earlier than they’ll elevate new capital to spend money on the Seventh Wave challengers. Confusion in capital markets will work in favor of the incumbents, as will their very massive money reserves.
What are the very best methods for CIOs? 1) Beware legacy distributors bearing AI items – they’re faking it till they’ll make it, pretending that their platforms can transition to the Seventh Wave; 2) improve your synthetic intelligence quotient (go here in case you are a shopper) so that you simply and your workforce can kind the fact from the fantasy that will probably be assaulting you out of your legacy suppliers and from startups; and three) for those who can afford to delay, you might need to delay large software program adjustments till AI finance, AI CRM, and AI ERP choices turn into obtainable from AI-native distributors.
That gained’t occur till late 2026 and 2027.
