Once upon a time, software ate the world. Now, AI is here to digest what’s left. The old model of computing, where apps ruled, marketplaces controlled access and platforms took their cut, is unraveling. What’s emerging is an AI-first world where software functions aren’t trapped inside apps but exist as dynamic, on-demand services accessible through AI-native interfaces.

For decades, computing has been a glorified filing cabinet. Applications were digital folders, self-contained, rigid and walled off from one another. Want to check the weather? Open an app. Need to book a flight? Another app. Pay a bill? Yet another. The result? A fragmented user experience where we toggle between countless silos, each competing for real estate on a home screen.

Generative AI breaks this model. Instead of clicking and tapping through individual programs, users will interact with intelligent agents that dynamically retrieve, process and generate responses in real time, no app required. Ask a single AI assistant to manage travel, optimize finances and recommend a workout routine? Done. Need legal documents reviewed while ordering groceries and summarizing today’s news? Seamless. The new interface is not an app. It is conversational, predictive and frictionless.

To be fair, this new world of functional intelligence is not yet entirely ready. Apps are not disappearing overnight, but their grip on computing may well be slipping. AI doesn’t care about pre-packaged software silos. It rewires the experience, making software modular, dynamic and deeply integrated. The entire idea of opening and switching between apps? That is going to quickly feel like legacy thinking.

The incumbent risk: Traditional marketplaces are on the clock

For years, digital storefronts and walled-garden marketplaces were unbeatable moats. Control distribution, tax every transaction and rake in billions. Beautiful. But what happens when applications become…. unnecessary?

The rise of AI-driven interactions threatens the entire app distribution economy. If users rely on AI-native systems instead of installing discrete software, traditional software marketplaces become a relic. AI eats the middleman. The economic model shifts from app monetization to AI-driven service layers, where interactions are seamless, personalized and, most importantly, beyond the reach of legacy platform control.

Two unavoidable consequences:

1. Revenue disruption: No more 30% cuts on app sales or in-app purchases. If AI handles transactions autonomously, app store economics implode.
2. Platform disintermediation: AI is cloud-native and hardware-agnostic. Control over digital ecosystems diminishes as software becomes an ambient service rather than a gated experience.

The new question is who owns the AI-powered service layers? Because, whoever does will own the next trillion-dollar industry.

The new power structures: AI models and vertical AI solutions

AI eating applications creates an obvious power vacuum. Where does the value shift? Simple, control over:

• AI models: The entities developing the most advanced foundation models define the core intelligence layer.
• User interface and personalization: Whoever builds the most intuitive, AI-native interfaces will dominate engagement.
• Data and integration: AI thrives on access to real-time, proprietary data. Whoever owns the data pipelines controls the insights, the intelligence and, ultimately, the economy.

But there is another force at play: Vertical AI solutions.

Right now, most large language models (LLMs) feel like a Swiss Army knife with infinite tools — exciting but overwhelming. Users don’t want to “figure out” AI. They want solutions, AI agents tailored for specific industries and workflows. Think: legal AI drafting contracts, financial AI managing investments, creative AI generating content, scientific AI accelerating research. Broad AI is interesting. Vertical AI is valuable.

Right now, LLMs are too broad, too abstract, too unapproachable for most. A blank chat box is not a product, it is homework. If AI is going to replace applications, it must become invisible, integrating seamlessly into daily workflows without forcing users to think about prompts, settings or backend capabilities.

The companies that succeed in this next wave will not just build better AI models, but better AI experiences. The future of computing is not about one AI that does everything. It is about many specialized AI systems that know exactly what users need and execute on that flawlessly.

The entire software stack is being rewritten in real time. What replaces the old model?

• Microservices over apps: Forget bloated applications. Future software will be modular, on-demand and AI-callable. Booking a trip? The AI agent sources flights, hotels and rental cars in real time, without you ever opening an app.
• AI-powered marketplaces: The next software marketplace is not an app store. It is an AI-native services marketplace, where users subscribe to function-specific AI agents rather than downloading static software.
• AI-as-a-service: Instead of selling standalone apps, developers will build “skills” or “agents” that integrate into an overarching AI ecosystem, monetized through subscriptions or usage-based pricing.

The inevitable disruption

This is not an evolution; it is a coup. Gen AI is not just another technology layer; it has the potential to eat the entire software industry from the inside out.

The old software model was built on scarcity. Control distribution, limit access, charge premiums. AI obliterates this. The new model is fluid, frictionless,and infinitely scalable.

The platforms and businesses that fail to adapt may well be relegated to the history books, joining the ranks of those who dismissed the internet, mobile and cloud before it.

AI is not just the next software wave; it is the wave that breaks everything before it. The only question left is: Who rides it and who gets drowned?

 Justin Westcott leads the global technology sector for Edelman.