AI will drive the cost of making software up, not down.
With the rise of AI, the cost of making software will go up, not down. That is what Marc Andreessen believes, and he makes a great point.
How come? Yes, the act of making a piece of software will become significantly cheaper. And it will become way better.
But, as the software improves, the customer's demands will also rise.
This will lead to more complex solutions and bigger road maps, driving the cost up.
That's Jevons' paradox.
Jevons' paradox occurs when technological progress increases the efficiency with which a resource is used, reducing the amount necessary for any one use. But the falling cost of use induces increases in demand enough that resource use is increased rather than reduced.
business's marketing and differentiation side
-> Building freeways to spread out traffic will only lead to more cars and more traffic.
-> CGI in Hollywood was developed to reduce the cost of filmmaking, but people's expectations increased, so the cost involved in CGI also increased.
-> During the Industrial Revolution, when coal prices decreased, coal consumption increased.
-> Electricity-efficient technology has made us use more electricity than ever before, without concern for saving it.
-> We are more productive than ever before, but the time we save is then spent on "more work."
-> As cars became more fuel efficient, we started driving more.
It’s such a common issue that some environmental scientists advocate for less efficient technology because extremely efficient tech leads to higher usage and demands.
I believe the same thing will happen with business's marketing and differentiation side. We are already seeing it.
As the number of competitors increases, common sense would suggest more diversity and differentiation. There’s something for everyone.
Not the case. Sameness is everywhere, and it will be more so in the future. When the costs are high, copying others is a less risky strategy.
But strong differentiation can be a way out of the “costly” product development rat race.