Is SaaS really the only viable (or "unicorn") business model?
Do people not sell software licenses anymore? (In theory nothing prevents you from making your license require recurring payment as well)
Do people not sell software licenses anymore? (In theory nothing prevents you from making your license require recurring payment as well)
In fact, companies that sell services with a recurring revenue component are generally seen as higher margin and more stable across industries. For instance, Aerospace & Defense companies that have a strong "Aftermarket" presence (which really means maintenance, spares, repairs, etc.) generally command higher valuations.
The SaaS hype just takes this to the ultimate level. Digital services have very little costs (relative to their physical counterparts). Recurring digital revenue equates to mind-boggling numbers like Salesforce having >70% gross margins, which is probably the most prominent reason why Tech valuations have skyrocketed in the cloud era
However:
> For instance, Aerospace & Defense companies that have a strong "Aftermarket" presence (which really means maintenance, spares, repairs, etc.) generally command higher valuations.
Not sure whether that's a good example, because that might just be exploiting some weirdness in how government projects get funding approval, and might not be relevant to the wider (and software) world?
Another example are Automotive companies like heavy-duty vehicle parts manufacturers, which also benefit from higher Aftermarket exposure
(I thought your initial point was good, just that the argument for it wasn't as strong as it could be.)
In my opinion this is a feature, not a bug, but the business reason is clear for why all commercial software is moving towards the SaaS model.
-certainly there are exceptions. Exceptions seem more likely with smaller older companies with different priorities.