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Hardware, not software

There was a time when computer hardware was just a commodity.

Remember when the IBM PC was released and shortly after, dozens, hundreds, thousands of clone machines began flooding the market.

These machines were all pretty much the same. The same processor, the same memory, the same graphics and often, even an almost identical case.

The only differentiation was in the price.

Yes, hardware had become a commodity.

The real money was in software. Without that software, this hardware was simply an expensive door-stop or paperweight.

Well guess what, AI has changed all that.

In recent weeks and months, software companies that once ruled the NASDAQ have seen their stock prices begin to tumble.

Even the once unassailable blue-chip company Microsoft has seen its stock price fall 10 percent, effectively wiping out US$360 billion in value.

However, that's peanuts compared to the decline in Oracle's stock price. The software giant has seen its value fall by a jaw-dropping 37% in the past 3 months.

These two examples are indicative of a rapidly growing trend towards the devaluation of software companies in the face of a growing AI industry.

It should not surprise anyone that when capital is drawn to a sector that promises huge growth and massive potential gains, existing players will suffer.

Another factor is "vibe coding".

When the giants like Microsoft and Oracle grew to dominance, software was something that required "real programmers" to write code. The cost of creating software was high, as were profit margins. That boosted the fortunes of those whose software was in demand.

Today however, we're told that even a non-coder can use agentic AI to knock up a perfectly servicable program in a tiny fraction of the time that a "team of skilled programmers" would take and for an even smaller fraction of the cost. This undermines the value of those software giants in a huge way.

Right now, software is not seen as a good place to invest money. Instead, computer hardware companies are seeing skyrocketing valuations, based largely on the massive demand resulting from AI datacentre expansion.

It's probably pretty obvious to anyone watching all this unfold that choosing computer programming as a career option is probably a lot less sensible and lucrative than opting to become a plumber or electrician right now. I suspect that a lot of people who've been making a good living cutting code over the past decade or two will soon find themselves looking for new career paths.

No matter what happens in the AI world, the value of the average programmer has been slashed.

If you're very lucky you may be able to pivot to becoming an AI-engineer that specialises in creating software using AI tools and who has skills in dealing with the weaknesses that AI still has in such areas. However, even that window will eventually close as AI systems continue to improve.

Unfortunately, this also means that the door is closing on the "one man band" entrepreneurial computer startup opportunities. Gone are the days when someone can spend months cutting code on the kitchen table and then release a program that sells in good numbers. Chances are that if you do come up with a brilliant bit of software, someone will simply vibe-code an equivalent and all your hard work will have been for nought.

It will be interesting to see where all this leads... I'm just glad that I'm technically (if not actually) retired because I would not want to be negotiating setting and following a career path over the next few years.

Carpe Diem folks!

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