We've Entered the Age Where Need Creates the Technology

A New Paradigm for the AI Era

Until now, we've lived in an era where 'technology creates the need.' Because developing software cost so much money and time, any technology, once built, became a moat in its own right. Users had no choice. If a SaaSSoftware as a Service​ company offered a service, then no matter how unique our industry was or how distinctive our own way of working might be, we had no option but to adapt and conform to that standardized spec. 

Instead of fitting the technology to our needs, 

we had to cram our needs into the framework of the technology.

But AI has begun to shake this structure. The traditional SaaS-based software market is being disrupted, and demand is rising for customized, specialized software built for individual companies. It means we no longer have to force-fit ourselves into a framework someone else built.

So, amid this change, who becomes the winner?

The Rise of Specialized Industries with a User Moat

Here's how I see it. The answer lies in specialized industries that clearly had a software need but had never been able to solve it on their own—industries that also have their own standard specifications and a distinctive way of doing business. Only the companies that build their own AI and software within such industries, and carry their services forward through it, will survive. It's worth looking among the 'boring industries' I mentioned in my last piece. ※ Boring Industries Are Actually More Interesting | Schlep Business

In the end, won't it be the companies with a 'user moat,' rather than a technological one, that survive? These are the businesses in specialized industries that already have an established customer base, structured so that those customers can't leave. I suspect such companies will build their walls even more solidly and acquire monopolistic power. Moving away from an era of leaning on large external software to maintain a sprawling operating system, I'll cautiously predict that the only companies to survive from here on will be those small enough to develop their own specialized technology, tailored to their own scale.

A Pattern History Repeats

In fact, this is a current we've already lived through once before in history.

When the conveyor-belt system appeared in the second industrial era, after the first, consumer demand was already voracious and outpacing supply. Mass production quenched that thirst. But over time, oversupply set in, and companies had to diversify, shifting to small-batch production of many varieties. We are now, as an extension of that very trajectory, witnessing the same phenomenon play out in software.

From Few Varieties to Many: Which Services Will Survive?

The factories that once had to be built with enormous capital for mass production, and the costly processes they required, are becoming unnecessary. Consumers themselves can now produce for their own needs, and that production is steadily evolving toward customization for the individual consumer.

Let me put this in a simpler analogy. Think of a 3D printer. Suppose an era has arrived in which each household uses a 3D printer to make whatever tool it wants, prints it out, and uses it. But the experts among you will know immediately just how crude the output of a home 3D printer is compared with a product made by injection molding. They're worlds apart. The same goes for making books. You could print the pages on the home printer you already own and take them to a copy shop to be bound. But that feels like a different level entirely from an actual, finished book, doesn't it?

This is an era in which everyone has been handed the tools, yet differences in quality still remain. In this situation, I believe the directions in which software-based services can be offered split into three.

Services That Close the Quality Gap

Everyone now has the tools, but differences in the quality of the output are inevitable. Companies that provide the software or hardware modules to narrow this gap will surely survive. Lifting crude output closer to professional-grade results—that is the first opportunity.

Services That Create Needs No One Imagined

I suspect the companies that succeed will be those that can genuinely create a 'need' even when people don't know what they need, what is required, or what they want. Even with a 3D printer sitting at home, if you don't know what to make or what you'll need, you can't print anything at all. In the end you just download some blueprint floating around online, print it once, and quickly lose interest. Tools are useless without direction. Providing that direction—that is the second opportunity.

Services That Create the Market Itself

Companies that establish a particular market and keep people flowing into it and active within it can only grow from here. This isn't a one-off transaction of developing and delivering a single piece of technology, but building a structure in which transactions occur continuously. A market where, the moment a need arises, supply is produced and delivered—and getting people to naturally enter that market—itself becomes the moat. This is the most powerful service a company with a user moat can offer.

Where the Publishing Industry Is Headed

Let's come back to the world of publishing.

Shall we take a look at how the product we call a book is made today? An author writes a manuscript and submits it to a publisher. The publisher handles the entire process—editing, proofreading, copyediting, design, and production—then delivers the finished book to a distributor for shipment to bookstores. And from there, distribution happens at the stores.

But here's the thing: once a book reaches the bookstores, the marketing costs fall entirely on the publisher and the author. The bookstore's job ends at putting it on the shelf. Unless money is spent, there's no more prominent placement among the displayed titles, and no extra exposure for promotion. In fact, once a new release becomes a backlist title and demand dries up, it gets shifted to the wall shelves, or pulled from the floor altogether. So every effort to change how a book is displayed has ultimately been left to the author and the publisher.

Publishing's Long-Standing Thirst—That Is the 'Need'

This is the thirst—the need—that publishers and authors have felt for so long in the publishing market. When it comes to displaying the product that is a book, bookstores have been offering a service that fails to satisfy that need.

That's why, if you look at bookstores these days, you'll see all sorts of miscellaneous goods displayed alongside books, the original product. I believe the cause lies precisely here. Rather than focusing on which of their service users' needs they ought to meet, bookstores have come to concentrate on a business model built around real-estate rental income from their space.

From Here On, the Market Must Move Toward 'Need Creating the Technology'

Rather than building the technology first and then demanding a need for it, we have to build the technology that is needed. What matters is pinpointing exactly what the publishing market truly needs—where publishers and authors have felt their thirst for so long—and creating the technology and services that fit. That is the direction the publishing industry must take going forward, and it is the new market we want to build.