Will There Be A Shakeout in AI Software?

I’ve got more reflections this week on recent conversations with founders/CEOs in software. I believe we’re in the early stages of another major platform shift – the type that allows some giants to consolidate power and some upstarts to become giants.

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Veeam

Veeam specializes in data protection and backup; I spoke with CEO Anand Eswaran about his acquisition of SecuritiAI for $1.73 billion, and the strategic rationale:

I think that one of the reasons we went into acquiring Securiti is the painful cries from our customers. They need multiple tools to look at data flow. They look at how their primary data is structured. Is the primary data usage pattern leading to the right resilience strategy? How do they get complete assurance on how this is feeding – even applications like enterprise search, Glean? I mean, what we come to the table with is not just data security and resilience. We actually have enterprise search capabilities, which is based on the same permissioning model, which has made Securiti so good. So when you bring all of those things together, we feel that this is just going to change the game. And that unified platform is the heart of what every company needs and was asking for from us, which led to this.

I remember when Oracle made its hostile bid for PeopleSoft, pretty early still in the post-.com-bust realization of the internet’s promise in the enterprise. And that was this huge moment where, coming out of both the exuberance of building all of this internet related stuff and then the depression of losing the party atmosphere around technology, the rationalization came in, of, some of these things have value.

Oracle was a first mover rebuilding this enterprise technology stack with an eye toward the internet era that we were then living in. What I think I’ve seen since is that every time there’s a major technology or platform disruption, it sort of resets the chessboard and allows players who have the right kind of grounding and advantage in a certain key technology to clean up, to expand.

I think we saw something similar happen in mobile. We’ve seen it play out in an earlier phase of cloud, and I think it’s going to happen in AI. It’s at a smaller stage right now, but that consolidation is healthy, and underway already.

MinIO

I also spoke with MinIO CEO Garima Kapoor, whose company helps customers deal with data at a massive scale in the cloud – a valuable capability in the AI era, when massive amounts of data feed the models. She said it’s time to include OpenAI and CoreWeave among the hyperscalers, based on how they’re innovating:

Garima: Some of these hyperscalers are leading the way when it comes to the scale conversations that we are seeing.

Jon: So you’re talking about a different category of hyperscalers than the public cloud. Is it time to include the likes of OpenAI and CoreWeave in that, based on their ambitions?

Garima: Yes. I was having this conversation last week – I believe OpenAI has been very open about it. Their CFO made a statement about OpenAI being the standard when it comes to AI data infrastructure. They are making the investments in that, in that scale, and it is surprising to see that public cloud is – the traditional set of public clouds, AWS and Azure, they’re a little bit behind this kind of innovation that we have seen. Nvidia is doubling down on whether it is AI factories, whether it is sovereign AI clouds, whether it is neo-clouds here in the U.S. So these are different emerging clouds that we are seeing. And it is no longer going to be just AWS, Azure and Google Cloud.

This is controversial for me, Garima calling OpenAI and CoreWeave hyperscalers, in part because when I think of hyperscalers, I think of companies that have not just the scale ambitions and the maturity, but the balance sheets and the revenue from their core strategic business to drive a continuing, convincing expansion.

So OpenAI – I’ll take that first, separate from CoreWeave. Sam Altman at OpenAI is doing this really interesting thing, tying its fortunes to some of the most established, strongest players in AI infrastructure.

Nvidia: As you mentioned, we were out there in Santa Clara with Jensen, Sam and Greg just a few weeks ago with this Nvidia investment tied to a datacenter rollout linked to equity. It both provides OpenAI with desperation capital, and also with an incentive not to tap into it too often because if they do, they end up potentially diluting themselves.

But then you also have this deal with AMD that OpenAI has done, structured differently. There’s a little bit more of an incentive for them to tap into that capital. Maybe that gets them out from under Jensen’s, equity weight, a little bit. And then they’re tied up with Oracle as well. We were just talking about Oracle. And so because OpenAI is such a strong brand name driving the AI narrative, maybe they do get to be a hyperscaler despite the fact that their business is nowhere near profitable at this point.

They’re a demand driver not only for themselves, but Nvidia needs them. AMD needs them. Everybody wants OpenAI to keep going. CoreWeave I’ve got questions about. Not that their technology isn’t great. I hear raves about that, but they seem to be a beneficiary of the overage in demand for AI infrastructure. And it’s not that I think there’s going to be a satisfaction of demand anytime soon, but when we get closer to satisfying demand and there isn’t such an overage, how much does that affect the valuation of a CoreWeave and therefore its ability to continue scaling at this rate? And then are they just a scaler and not a hyperscaler? That is my question there. I don’t think we have an answer to that quite yet.

Gong

At the company’s Celebrate ’25 event, Gong CEO Amit Bendov’s team unveiled what they’re calling the Gong Revenue AI Operating System. Since it’s taking some specialized sales functions and putting them front and center, I asked if these kinds of advances threaten incumbents like Salesforce, that became systems of record in prior innovation eras. He said no:

I don’t think that anything would become just a data store. I think we’re living in a brave new world, actually. Like, way more exciting. So with the advance of [model context protocol] now, customers can mix and match very, very easily. Integration was very hard before. It still is a challenge. It’s not zero effort, but it’s a lot easier right now. Let’s say that you want to pull for a customer briefing, I want to pull information from my inventory system. It’s very easy to pull that information. I think there’ll be agents from Salesforce, agents from Microsoft, agents from Gong that will be talking to each other. I don’t think anybody is going to monopolize either the data or the AI part. They all will be able to play together. I do think that companies that have large data, which is the context for AI, have a huge advantage. To do it in a way that is secure, scalable and trusted within the organization is not trivial.

Amit was very diplomatic and gracious. And I also take the facts of what he was saying there. But sometimes in other disruptive eras, when there’s a big technology disruption and you have different players of scale that then try to take advantage and expand, you also get smaller players who can see the future and have a better vision for how that technology gets executed. Sometimes they become a central player in a space and the entire ecosystem pivots.

I’m thinking about Facebook and advertising online. There was already an established order in advertising when Zuckerberg was scaling up the business side of Facebook 20 years ago. But his vision for how to combine identity and all of that social signal with the ability to sell through it, and the Like button, reconfigured everything.

I wonder if there will be players in AI, both on the consumer side and the enterprise side, who are able to take advantage of this technology moment and become, as Darth Vader might say, the master and not the student anymore.

If you’d like to join me – and peers – for deeper conversations on innovation and leadership, get on this list for Fortt Knox Executive Communities, launching soon: mba.fortt.com.