AI code generation creates the opportunity for a new wave of niche software products

Viral Shah

May 23, 2024 — 2 min read

The market for niche AI-powered products is growing considerably.

Software products can now target narrower audiences with more specific problems in a profitable way, just like TV and entertainment went from mass-appeal to narrower content targeting smaller audiences in the past 15 years. Why? The reason is slightly different for the two different industries, yet still relevant.

Entertainment as an example for software

In the entertainment world, new means of distribution via streaming made it possible to create content that hits a much narrower segment than in the era of classic TV programming, while still earning money. What did streaming bring?

A new way to consume with on-demand
A new form for a catalog with infinite shelf-life and access
Much better audience data and ability to target

Netflix series like Master of None and Never Have I Ever never would have seen the light of day on broadcast TV. These are stories about experiences and life as an Indian American, while eventually gaining further appeal, had a narrower initial audience.

For SaaS and software products, new means of production via AI code generation brings the possibility to target narrower segments and problems. What does AI code generation bring?

Lowers the cost to create something custom, tailor-made (both in time and money)
Gives unprecedented control to people with a business idea, compared to traditional outsourcing or freelancers

Awareness and adoption lags behind tech

It's important to remember that in-market technology does not equate to market awareness! Niche products can outcompete general purpose technology like ChatGPT in two ways:

A fit-for-purpose product experience and workflow
A positioning and go-to-market that targets the customer problem

People that are deep into the AI wave will be aware of new things the latest and greatest LLM is capabile of. But again and again we see that a large majority of people don't even know what is possible (and honestly, most don't even know what an LLM is).

A great example is Elle, who I spoke to in the video above. She discovered how useful ChatGPT was for her ADHD, and built https://neuromermaid.ai/ to help people like her with researching and learning.

What problem are you looking to solve? Use Databutton's AI agent to build your next product!

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