Melius’ Ben Reitzes: Software is going through a ‘generational transition’

I just don't think paying extra for AI is a thing. Adobe's not successful with Firefly. Salesforce is trying it with Agent force. Microsoft just said they're going to charge you an extra 99 bucks and they want you to pay extra for Copilot. Legacy SaaS companies are trapped in an innovator's dilemma. They rely on seat-based subscriptions, but corporate layoffs are shrinking total seat counts. To compensate, they are trying to charge premium add-on fees for AI tools. However, enterprises are refusing to pay extra for what they view as basic functionality. Furthermore, heavy AI usage consumes internal cloud capacity (such as Azure for Microsoft), creating a high-cost infrastructure loop that degrades overall margins without driving proportional revenue growth. AVOID traditional seat-based software giants attempting to force AI price increases, as they face severe enterprise pushback, shrinking seat counts, and rising internal compute costs. AI tools prove so undeniably productive that enterprises capitulate and pay the premium fees, or these companies successfully pivot to consumption-based pricing without suffering a revenue dip.