Apologies to the Grateful Dead, but what a long, strange year it’s been in 2023 enterprise tech news. It began with a ton of Salesforce drama and eventually got taken over by generative AI and ChatGPT, which seemed to come out of nowhere to completely dominate the news cycle this year.
But even though AI clearly influenced much of the news, and even my own coverage, there was still a ton of other enterprise stories that made the news this year.
The rise of generative AI in the enterprise
It would be impossible to discuss this year’s news cycle without talking about the impact of generative AI. When OpenAI released ChatGPT at the end of last year, it would have been impossible to understand the impact it would have on enterprise software in the coming months. Yet it has the potential to be truly transformative, changing the way we interact with software, and perhaps represents the biggest change to UX (user experience) design since point-and-click.
Just about every enterprise software company announced its intentions to build generative AI interactivity into the interface, and we should start to see those efforts come to fruition in 2024. The big questions around this will be how well they implement it, how much it costs to use the new features, what the billing model looks like, if it adds significant value to the user experience and if people truly use these features.
Salesforce’s early-year troubles
This year was a tale of two different years for Salesforce. The company started the year with a ton of trouble, from the loss of key executives like co-CEO Bret Taylor and Slack CEO and co-founder Stewart Butterfield, a big layoff, an influx of activist investors and lots of bad news. However, revenue grew 14% for the first earnings report in March, then grew a consistent 11% from quarter to quarter for the remaining three quarters of the year, and it is ending the year with the stock up 97%.
The company’s problems dominated our coverage with 19 stories between November 2022 and the end of March 2023. Among the things we will be watching in the coming year: Will Salesforce continue to find stability in 2024, are the layoffs and cost-cutting over, and can the company increase revenue growth without additional acquisitions?
Tech layoffs
The tech layoffs dominated the early part of the year and stubbornly persisted into recent months. Microsoft, Salesforce, Alphabet and Amazon laid off tens of thousands of people, using the excuse they had hired too many employees during the pandemic, seeing the rush to the cloud as more permanent than it proved to be.
We looked at the numbers behind the layoffs, particularly for tech workers such as engineers and IT pros, and found that those employees continued to find work. Other roles struggled, however, and when the layoffs started up anew in recent months, we explored the reasons. Will the trend continue in 2024, or will the cost-cutting that led to these layoffs finally be over?
AWS chasing Microsoft in AI
AWS, which has dominated cloud computing since it invented the concept in 2006, saw its growth slow pretty dramatically in 2023 with a troubling downward trend from 20% to 16% to 12% to 12% again. While part of that could be explained by a general slowdown in cloud spending and the law of large numbers, it was surely not directionally what the largest cloud vendor was hoping to see in 2023.
Meanwhile, Microsoft appeared to dominate the move to generative AI, mostly through its strategic and financial partnership with OpenAI. While Amazon announced a bunch of key moves — including new products and partnerships around generative AI in the final months of the year — it felt like it was playing catch-up.
One of the stories to watch in 2024 is whether Microsoft’s perceived head start will translate into market dominance, or if it is truly early days and Amazon and others still have time to catch up.
OpenAI drama
When OpenAI released the GPT-4 large language model at the end of last year, followed by ChatGPT, I don’t think anybody saw the impact these releases would have both on mainstream perception of the power of AI and the impact on software in general.
Perhaps that’s why everyone was so shocked when the board suddenly fired founder and CEO Sam Altman in November. The whole situation was eventually resolved after a rather long week, and Altman and his partner Greg Brockman returned to run the company. But it left lingering questions around what led to the decision to fire him and what impact it would have, if any, on the company’s reputation and momentum going into the new year.
Nvidia’s monster year
One company that benefited greatly from the rise in generative AI (see how often I keep repeating that?) was chipmaker Nvidia. It saw increasing demand for its GPUs, which help power the training of large language models. Consider that the four quarterly reports in 2023 went from $6 billion in Q4 2023 in February, to $7 billion in Q1 2024 in May, to $13.5 billion in Q2 in August to $18 billion in November. That’s quite a rise.
One of the storylines to watch in 2024 is whether Nvidia can keep up the pace of this kind of monster growth because typically, that level of growth is challenging to sustain. Just ask Zoom.
The drop in enterprise M&A
The list of top 10 enterprise M&A deals for 2023 saw a big drop-off in total deal value from the last couple of years. The reasons were many: high interest rates; a tighter regulatory environment; and the big, highly acquisitive companies staying mostly on the sidelines. As the year closed, there was a small uptick in deals, but other than Cisco acquiring Splunk for $28 billion, the year was mostly quiet by recent standards.
One of the big questions for 2024 is whether M&A will return to the levels we’ve seen over the previous few years, or whether it will remain relatively quiet.