That variant of "AI in the product" can still be viewed as a tool call for the general AI on the outside, and my point still stands. That AI / tool can be very much a commercial offering you pay for, but that's much less business than product vendors are used to today.

While Figma could probably survive that way for some time, most software products can't, because they don't have anything special in them.

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Fundamentally, a product is our industry's "unit of billable good/service". It's composed of a number of "operations" that are more or less closely related to each other, that someone grouped together into a larger whole with a User Interface, and slapped a brand on, so it can be sold.

From user's POV, that UI is something standing in between the user and the problem they want solved. Sometimes it's what they need, other times - not quite. From vendor's POV, UI is the mechanism of control over what users can and cannot do, and a prime sales/marketing channel, because the audience is captive.

Now, the AI sitting on the outside, operating on the functionality under UI, and composing it with functionality of other applications, gives users a superior meta-application, solving their own problem (and AI is not restricted to chat UI - there just hasn't been that much work done yet on ad-hoc, problem/user-specific UIs).

For users, that's a win - the AI may not be perfect mode of interaction (can get close with custom UIs), but it does not obstruct them. For vendors, that's a disaster, because it destroys coherence of a product, reducing it to a bag of tool calls, with zero branding and no control/upsell surface.

That's what I mean by AI subsuming products, and it being a mortal threat to most of the software companies today.

Makes sense what you say. Sounds like you've thought a lot about this. If you write a post somewhere I bet others on HN and beyond would fancy a discussion as it's very much a topical issue now.