Sridhar Ramaswamy sees the major software players beginning to sort the AI winners from the losers. As of now, Snowflake, the cloud storage company where Ramaswamy is chief executive, is on the upside.
The positive results were much needed for Snowflake following a stock slump that has decimated many software-as-a-service businesses due to investor fears about AI replacing traditional software vendors. Snowflake is among a pack of companies anchoring themselves after launching major AI initiatives that incorporate agentic technology with the data the company handles. The strong Q1 results (revenue grew 33% year-over-year, the fastest pace in two years) validated the consumption-based pricing model the company has long had, Ramaswamy said, and showed that traditional software can transition to AI compute.
“It’s important to understand that all software companies are not the same,” Ramaswamy told Fortune on Friday, days before Snowflake is set to host its tech summit in San Francisco.
The difference for Snowflake, Ramaswamy said, is that it has priced its products by consumption from the getgo. “We recognize revenue only when a customer actually uses Snowflake’s capabilities,” he said. “We have to show value to make money.”
Software pricing is among the top issues vendors like Snowflake have had to figure out since the advent of agentic AI, which has put pressure on the the industry’s traditional enterprise seat-based pricing model. Ramaswamy predicted that companies reliant on seat-based income will scramble to justify their premiums as employees use AI to accomplish an immense amount of work.
Ramaswamy became Snowflake’s chief executive in 2024, as the AI boom was taking off. Snowflake’s bet has been that the foundational “infrastructure layer” that supports and runs its user-facing products, along with its consumption model, places the company well for the long run.
Now, the next step is what Ramaswamy calls the control plane, which he describes as a “cockpit of work” where users, instead of only querying data, are orchestrating tasks across different applications.
“I liken it to the new browser,” Ramaswamy said of the control plane.
“You have to figure out how to harness the awesome power of these coding agents and put them to work in a responsible way,” he said. “I’m also very paranoid about making sure that I actually know what it’s doing and give permissions to it.”
Ramaswamy also said that he sees a shift away from the hundreds of different “off-the-shelf” SaaS applications toward a future that may involve far fewer major applications and more bespoke, small-scale applications.
“There will be major applications that folks will continue to buy, but there will definitely be a consolidation,” he said.
