Is software really dead?

Predictions of ‘SaaS-pocalypse’ are premature

We live at the dawn of a new era. Artificial intelligence models and agents are poised to re-orient critical tasks done across every kind of business. Seamlessly connecting company data to powerful models, the new AI agents will render obsolete many current workflows, taking with them the need to buy and operate software programs. Businesses that sell software by the seat will face overpowering headwinds of falling seat count, reduced pricing and, ultimately, ruin. Or so we are told.

We make no claim to be “seers” of the technological future. But we have been through a few of these revolutions before. The internet-enabled mobile phone and e-commerce have transformed society. But, much to the chagrin of the year 2000 stock promoter, the big changes didn’t arrive, from an economic perspective, in Q4 2001, but rather many years later. And by the time the innovations of what was then called “the new economy” became fully established, a great number of the “old economy” leaders were still doing just fine, thank you.

And so, we consider the wreckage of software as a service (SaaS), that is, the so-called “SaaS-pocalypse,” which encompasses not only software companies, but also businesses involved in various information and other services deemed to be threatened by artificial intelligence. There are plenty of cliffs that major companies have fallen off in recent months. The victims, Salesforce, Gartner, Adobe now sport stock charts that only a mother could love. Down, and to the right.

Despite today’s hype, real change comes slowly

We do not defend the top-tick buyers of the early 2020s software boom, but we do endorse the idea that changes in the real world come much more slowly than the frenetic traders of modern capital markets appear to appreciate.

There are a couple of dynamics that support incumbents against the onslaught of new disruptive technologies. First, customers are often slower to shift their behaviour than the disruptors models expect. Details matter. Ninety-five percent accurate solutions do not easily supplant processes that are already working in an error-free fashion. And for businesses facing other potentially more pressing challenges, taking time out to revamp a background system like a software platform is a decision which can be easily postponed.

And second, the disrupted companies tend not to simply give up. We see “SaaS-pocalypse” victims using AI tools to improve their own products and to expand the value they are providing to their customers. Incumbents can cut prices, improve offerings, and bundle their offerings with difficult-to-displace hardware. And the historic data the customers need is usually embedded within the incumbent supplier’s platform.

As recent military campaigns in both Iran and the Ukraine underscore, it is much more difficult to invade territory than to defend it.

Geoff Castle is Lead Portfolio Manager of PenderFund Capital Management’s Fixed Income Portfolios, including the Pender Corporate Bond Fund. Excerpted from the Pender Corporate Bond Fund Manager’s Commentary, June 2026. Used with permission.

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