Five insights stood out to me from Redpoint Ventures’ recent market update and its CIO Software & AI Survey (March 2026):

1. Incumbents have an edge — but not a lock

58% of CIOs said AI feature additions are the main reason software budgets are growing — the highest of any category.

54% of CIOs prefer their existing vendors to add AI over switching to AI-native alternatives

But look deeper:

• Only 17% have a strong preference for incumbents adding AI.

• 37% have only a slight preference.

• And 33% are neutral.

So install base still matters. But weak products without AI capabilities are not protected.

2. Vendor consolidation is not slowing down. It may accelerate.

• 54% of CIOs are actively pursuing vendor consolidation.

• 45% of AI budgets are replacing existing software budgets.

• Only 3% expect AI to lead to more vendors.

AI is not opening unlimited new budget lines. In many cases, it is forcing a re-ranking of who deserves to stay in the stack.

3. Buyers still care more about best-of-breed products and integrations than price

When CIOs rank what matters most in vendor selection (after AI), they need:

• 45% best-of-breed functionality

• 45% integrations

• 33% security/compliance

• vs. 29% price

Trusted sales process is at a mere 9%

The bar is not just “has AI.” The bar is “works inside my environment and is worth the risk.”

Meanwhile, the cloud layer keeps getting bigger.

4. AWS, GCP and Microsoft capex jumped from $211B in 2024 to an estimated $509B in 2026

• Google’s 2024–2027E CAGR is shown at 49%

• Microsoft’s at 33%

• Amazon’s at 22%

My takeaway: more AI infrastructure spend creates more room for partner-led consumption, co-sell motions, and ecosystem pull-through. The cloud partner opportunity isn’t shrinking. It’s expanding — driven by AI workloads.

5. The real TAM shift: from software to labor

Redpoint’s agent maturity curve suggests we are moving from copilots toward task agents. That is a bigger shift than adding AI features into existing apps.

Once AI starts completing tasks end-to-end with human oversight, the addressable market moves beyond software spend and into labor spend.

Redpoint estimates that Task Agents alone expand the addressable market from ~$0.5T (US software) to $1.2T.

For cloud alliance and marketplace leaders, I take away 3 lessons:

• Your AI roadmap is now your retention and growth strategies. CIOs will stay with incumbents — but only if AI delivery is real

• Consolidation pressure means the winners will be partners embedded in strategic platforms, including cloud marketplaces

• Pricing models are shifting: 46% of CIOs expect usage- or outcome-based pricing to become more common. 29% say seat-based pricing will decline. This maps directly to cloud marketplace economics.

What’s your strategy?

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