De-productization: when the product becomes a prompt
SaaS monetized a historical constraint: software was expensive to build, so vendors encoded a common, opinionated abstraction once and rented it repeatedly. Customers adapted their processes to the product because configuring software was cheaper than constructing it.
Common problem → packaged abstraction → many customers
Generative software can reverse the relationship:
Problem → describe requirements → generate contextual solution
The competitive alternative to a SaaS product may therefore cease to be another SaaS product. It can become not buying a packaged application at all.
Computing has repeatedly absorbed standalone product categories into general-purpose devices: calculators, scanners, alarm clocks, navigation, basic media tools and communication features. The utility persisted while the standalone market weakened.
Persistent utility does not imply a persistent product category.
AI potentially generalizes this absorption. If a capable system can generate interfaces, workflows, reports, schemas and business rules over trusted infrastructure, portions of the application layer become generated capability rather than fixed product.
The moat then migrates toward what cannot be regenerated cheaply: durable state, identity, security, payments, exclusive rights, regulated interfaces, physical infrastructure, genuine participation networks and distribution.