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Automation's Cost Curve: Why AI Usage Is Squeezing Profits Across IT Services
Margin pressure driven by AI adoption and automation is fundamentally altering the economic model for IT service delivery and software. Trend Micro’s disclosure that operating margins fell from 19% to 15% while cloud and AI token costs nearly doubled, despite strong AI security product sales, highlights how AI-related expenses grow in step with usage. This shift breaks from the historical software margin structure, where scaling incurred negligible incremental costs, and signals a new landscape in which AI service operation continuously consumes resources.
A significant development…
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