“There are only two ways to make money in business: one is to bundle; the
other is unbundle.” – Jim Barksdale
Two decades ago this August, AWS – itself four years old at that point – launched the Elastic Compute Service, or EC2. Between that and the earlier March release of their Simple Storage Service (S3), Infrastructure as a Service (IaaS) – more commonly referred to as primitives these days – was born. Within a year it was an emerging force. Within five it was an eight hundred pound gorilla in market, reshaping the industry around it.
While it’s often forgotten now, there was a competing vision for the cloud almost from the start. Heroku was founded in July of 2007. Salesforce introduced Force.com in September of ’07, and Google followed with App Engine in April of ’08. These platforms and others that followed became a new category called Platform as a Service (PaaS). PaaS was positioned as a simpler alternative to IaaS. Instead of having to pick the building materials to host an application, one simply deployed it and left the rest to the platform.
Of these two potential approaches that emerged two decades ago, IaaS won.
There were many reasons for this. For one, IaaS looked much like what enterprises in particular were used to: compute instances were servers, storage was storage and so on. PaaS, by contrast, was somewhat alien. It didn’t look like what came before it. It was, instead, a black box that couldn’t be taken apart and inspected. Developers didn’t necessarily care about that opacity, but their employers did.
PaaS also necessarily involved tradeoffs. Building with the primitives of IaaS, enterprises could construct virtually anything from websites for strip mall petstores to high speed trading platforms. PaaS, by contrast, was only appropriate for a subset of workloads due to constraints either cost, technical or both. Being a general purpose platform in a world of highly specialized applications is a challenge.
The technology industry landscape, therefore, was dominated by primitives for nearly two decades. And from an adoption and spending perspective, it still is.
But the market has also changed in recent years. A few key factors:
- First: the number of available primitives multiplied. As such, it traced a parabola of utility. Initially, as the number of available primitives increased, the platforms usefulness increased in direct proportion. More primitives meant more possibilities. At some point in the last decade, however, it hit the down arc of that parabola and started declining in its appeal, with the ever expanding array of services transitioning from toolbox to burden. Six years in, the Developer Experience Gap remains an issue.
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Second: the PaaS core approach was reconsidered. If PaaS originally failed to achieve real scale in its adoption in part because of its general purpose focus, what if ambitions were narrowed and the platform were to target a particular workload or set of adjacent workloads? A specialized platform for a particular task is much more achievable than a Jack of All Trades. As expected (if not from the mentioned quarter), this realization has triggered a wave of market innovation in less generalized, and more specialized providers.
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Third: the rise of coding assistants is dramatically accelerating the number of applications created, and as a consequence, lines of code being deployed. It is at the same time gradually putting more distance between developers and the construction and deployment of the application itself. Not just with code creation – which will at times involve programming languages the developer has never learned – but from the underlying infrastructure. In more and more cases, technology selection is being delegated to coding assistants, and left to their own devices those coding assistants have a preference for abstract platforms, platforms that might once have been termed PaaS.
Given these and other factors, the market for abstractions that sit above the original primitives of IaaS has both fragmented and grown. To be clear, IaaS – or primitives, today – remains the dominant approach and will for the foreseeable future.
But the more complicated infrastructure becomes, the more appetite there is for simpler alternatives. Especially if the virtual, 24/7 pair programmers ubiquitous today are putting their proverbial fingers on the scale in favor of abstractions because they’re easier to programmatically manipulate and require less explanatory context (and thus fewer tokens).
All of which explains the great unbundling. In response to developers and enterprises seeking abstractions but frustrated with limitations of general purpose platforms for their workload of choice, a diverse array of different tools emerged to attack different problems via specialized abstractions sitting above primitives. A few rough categories have emerged.
- AI app builders (“vibe coding”): (e.g. Bolt.new, GitHub Spark, Lovable, Replit Agent , v0). App writes the code, and increasingly determines the hosting and backend too.
- General-purpose PaaS (“Heroku-like”): (e.g. Cloud Run, Fly.io, Render, Railway). Code written independently, deployed to abstract servers/containers/scaling.
- Front End: (e.g Cloudflare Pages/Workers, GitHub Pages, Netlify, Vercel). Code written independently, abstracted hosting/CDN/edge.
- Backend-as-a-service: (e.g. Convex, Firebase, Supabase). More than just DBaaS primitive: abstracted DB + auth, storage and other pieces.
- Internal Developer Platforms: (e.g. Backstage, Crossplane, Humanitec, etc). Highly specialized, internal developer-focused platform.
There are caveats to the above categories, of course. Some products belong in multiple categories. In other cases the lines in between individual categories can be less than distinct, as with the app centric examples. The reverse can be true as well, with some categories having little in common: see IDPs vs BaaS as one example.
But in an effort to understand how, where and how quickly the market for abstractions above underlying primitives is growing, we’ve been tracking over 70 projects – a number which will undoubtedly grow by the week, if not day. Their breakdown is here:
Unsurprisingly, the second largest category, and category with the longest history, is general purpose app PaaS platforms, topped only by – what else? – AI. The list makes rough subjective judgements about which are core to the market, somewhat adjacent, possibly dead (watching) and excluded (dead or disqualified for one reason or another). From a macro perspective, however, what the list demonstrates – along, arguably, with Heroku’s deprecation – is that the days of a one size fits all abstraction are over for the time being.
The unbundling has inevitably come for PaaS, just as it once did for databases in the first decade following the millennium. What’s equally inevitable – again, just as it was with databases – is that the unbundling will ultimately give way to bundling. Bundling which arguably has already started. A few examples:
- Convex Chef: from BaaS to app builder
- GitHub Spark: from front end to app builder
- Lovable Cloud: from app builder to PaaS
- Replit Agent: from PaaS to app builder
- Vercel v0: from front end to app builder
This is a market at work. Bundled product limitations are identified, unbundled products tactically attack them. The survivors then turn their eyes towards adjacent unbundled markets in search of growth. Normally this is a process that takes time; it took the database market well over a decade to fragment with the rise of NoSQL only to return to the multi-workload databases in demand today. It’s not clear that timeframe will hold here, though.
Consider the list of collisions above. It took seven plus years for Vercel (née Zeit) to introduce v0. It took Replit a little over 8 years to get to Agent, and GitHub over 15 to get to Spark. But those were companies founded, at the latest, in 2016. The newer market entrants tell a different story. Convex reached out of market in a little less than three years; Lovable took ten months.
Perhaps most importantly, in the aggregate, all of the above transformations took place within a 25 month window.
Between this re-bundling of previously distinct workloads, then, and the pragmatic reality that market will not support near two dozen large platforms let alone the new options arriving by the day, it seems reasonable to expect consolidation in the market for abstractions, and soon. The growth opportunities for the winners, however, should be substantial.
Disclosure: Cloudflare, GitHub, Google (Cloud Run/Firebase), Heroku (Salesforce) and Render are RedMonk clients. Bolt, Convex, Crossplane, Fly.io, Humanitec, Lovable, Netlify, Railway, Replit, Spotify (Backstage), Supabase and Vercel are not currently customers.
