Why Most Niche Software Vendors Will Soon Perish

Historically, there have been two types of software. All-in-one solutions try to be everything to everybody. Oracle, SAP, Salesforce, Microsoft, Adobe, and Google are prime examples. By contrast, smaller best-of-breed applications specialize tackle a single niche. Here are just a few of today's popular ones:

• Wispr Flow is probably the best dictation tool around as of this writing.
• Grammarly purports to be the ultimate writing assistant. Perhaps, but it doesn't analyze data.
• Plenty of folks swear by Riverside for podcasting, but you'll need a tool like Canva to design a sophisticated logo for your show.

One type of software isn't inherently better than the other; they're just different. As I've seen dozens of times in my consulting career, there are pros and cons to each.

The AI Disruption Tsunami

Large, diversified vendors are far more apt to survive tectonic shifts like the AI-driven one we're seeing now. There is, however, one key caveat: they must quickly embrace new technologies.

Make no mistake: size matters. Riverside may crush Adobe Audition, but it's far easier to envision a world without the former than the latter. Behemoths have grown bigger over past three decades—and not merely by organic growth. Oracle's list of acquisitions is extensive, as is Salesforce's.

This begs the questions:

• What does the AI-driven future mean for best-of-breed software vendors?
• Will they continue to flourish, or are their days numbered?

I'll answer those questions by addressing another:

How does a souped-up AI tool with no particular speciality fare against a best-of-breed application today?

For my analysis, I'll focus on one of my areas of expertise: data visualization.