The software industry is undergoing a fundamental shift from building technology in-house to buying it from specialized vendors. What started with cloud infrastructure has expanded to every layer of the software stack — from databases and observability to AI APIs. This 'vendorization' trend explains why new startups grow faster (they buy rather than build), why large tech companies have had layoffs (they no longer need armies of engineers to build internal tools), and why top engineer salaries are rising (engineers at vendor companies have outsized ecosystem impact). Open source is declining as a business model as fully-hosted multi-tenant APIs prove more economically viable. AI accelerates this trend further due to GPU costs favoring multi-tenancy and FOMO driving adoption. The author argues this mirrors centuries of supply chain specialization and will continue to deepen.
Table of contents
Software companies buying software: a story of ecosystems and vendorsWhat’s a tech company?Enter the cloudRefactoring the software stackEverything becomes an APIThe buy it vibe shiftThe security vibe shiftThe economics of a deeper stackGoing up and down the stackWhat does this mean to the software ecosystem?Ok, but what about AI?SummarySort: