Will ecosystems like AWS consolidate 30% of software vendors?

If software is eating the world, will #cloud marketplaces 😋 eat software?

A few days ago Gartner predicted that ecosystems like Amazon Web Services (AWS) may "consolidate" 30% of software vendors in the next two years (by 2025).

🤝 Today large cloud ecosystems (Google Cloud, etc.) partner with software companies to offer additional products for users of cloud marketplaces. It's super convenient for buyers.

Gartner’s argument (other analysts agree directionally) is that as these cloud ecosystems will mature, they will offer more and more native services and evolve much faster than independent software vendors ever can.

So just as you have an option to buy Amazon Basics in an e-commerce store, you’ll have a similar software service in your cloud provider #marketplace.

In the process 30% of independent software companies may be “consolidated”.

💬 The largest cloud service providers (CSPs) are creating ecosystems whereby they and preferred independent software vendors (ISVs) offer a range of pre-integrated and composable services....

As CSP ecosystems mature, there will be diminishing need for third-party ISV tools because CSPs can quickly release new features and become fast followers of innovation due to the speed and agility of cloud development.”

🌞 But there is also a countertrend

In a separate prediction, Gartner suggested that in the same next two years (by 2025) we will have 750 million apps. Though 70% of apps will be no-code, and much of the rest will be created for in-house purposes, it’s still 22,5 million software apps.

It’s like Apple AppStore x 7.

In comparison, 25,577 offerings currently available at AWS marketplace is a small number.

Here is top 5 categories in AWS

Infrastructure Software - 7058

DevOps - 4890

Data Products - 4128

Professional Services - 3175

Business Applications - 2488

So while the consolidation trend will be here, now is still a great time to build a strong software business.

💡 What should be a #partnerships strategy for a SaaS company then?

Apart from building great software, consider partnering with cloud marketplaces because this is where customers are flowing.

But do that consciously and build your own #ecosystem and community too.

Because your product, connections with customers and partners is what your company owns at the end of the day.

👇 Check:

Partner Insight breakdown of best practices of partnerships with marketplaces

Gartner prediction