Counter-Narrative: AI-Embedded Incumbents Grow ~2x Faster Than Legacy SaaS — and Avoid Pure-AI-Native Margin Compression

Harvard Business Review·medium signal

Against the 'SaaS is dead' framing, analysis shows AI-embedded SaaS (AI bolted into existing workflows) growing roughly 2x faster than legacy SaaS in the same ARR band — without the inference-cost margin compression pure AI-native firms face. Median NRR has only drifted (≈105%→101%, 2021–2024), and mid-market/enterprise accounts still churn just 1–2%/month while expanding 15–25% annually. The disruption is real but uneven: concentrated in SMB and seat-heavy categories, not universal — a useful corrective for builders sizing the actual threat.