According to Omdia's latest report "The Path to Commercializing Generative AI for Software Vendors," ISVs are becoming a key driving force in taking generative AI from experimentation to deployment. By 2029, the Asia-Pacific generative AI software market is projected to grow to $27.6 billion, with a compound annual growth rate of 52.3%. In this wave, collaborative partnerships between ISVs and cloud providers will determine whether generative AI can truly achieve commercial deployment.

How do Independent Software Vendors (ISVs) collaborate with cloud providers to bring AI solutions to market? Generative AI is triggering a global innovation wave, but the path to scaled deployment remains challenging. Leading cloud providers have positioned AI foundation models at their strategic core, while Agentic AI with autonomous reasoning, planning, and action capabilities is becoming a new growth engine. To align with this trend, cloud providers are accelerating the launch of AI-specific frameworks and expanding multi-billion-dollar data centers globally.

However, despite high market enthusiasm, AI applications remain in early stages. Omdia's research shows that over 60% of GenAI projects are still stuck in the proof-of-concept (PoC) phase, with very few actually entering production environments. High computational costs, complex system integration, and talent shortages are major obstacles in moving from experimentation to scaled deployment.

Independent Software Vendors (ISVs) are becoming key partners in bridging this gap. Omdia predicts that by 2028, GenAI will create up to $158.6 billion in new opportunities for partners, with ISVs being among the most promising beneficiaries. The Asia-Pacific region has become a testing ground for this trend, with infrastructure construction by leading cloud providers accelerating, while Chinese ISVs are taking their first steps toward internationalization.

Data further confirms this growth momentum. Omdia expects the global generative AI software market to grow from $26.3 billion in 2025 to $101.3 billion in 2029, with a compound annual growth rate (CAGR) of 48.1%. The Asia-Pacific region shows even more rapid growth, rising from $6.4 billion to $27.6 billion over the same period, with a CAGR of 52.3%. For Chinese ISVs, this high-growth trend makes Southeast Asia an ideal first stop for overseas expansion.

**Structural Barriers ISVs Must Overcome**

While market opportunities are attractive, truly capitalizing on them is not easy. The ISVs discussed in this article mainly refer to vendors that develop and sell application or platform software, such as Snowflake or PingCAP, excluding cloud service providers offering IaaS or PaaS infrastructure. Although these vendors are at the forefront of AI commercialization, they face multiple structural challenges.

First, high computational and integration costs. ISVs often need to invest substantial resources in model selection, data preparation, and orchestration before market validation, with uncertain return on investment. Even if products are successfully launched, talent bottlenecks emerge—lean engineering teams often struggle to support continuous iteration and complex tool integration.

Second, trust and adoption barriers. Many ISVs lack brand recognition, making sales cycles unpredictable; when expanding into overseas markets, they must also address compliance requirements and insufficient local exposure.

Finally, commercialization uncertainty remains prominent. Current pricing models are not yet mature, with many projects still in pilot phases or highly customized single deployments, making it difficult to achieve replicable, profitable scaled growth. Many prototype products have gained attention but have not truly won customers.

**Differentiated Strategies of Cloud Providers**

Major cloud providers are adjusting their strategies to help ISVs break through various barriers, but their approaches differ significantly.

AWS emphasizes modular composition, integrating tools like Bedrock, SageMaker, and AgentCore, combined with mature Marketplace commercialization channels to help ISVs quickly build and promote AI solutions.

Microsoft Azure deeply integrates AI into enterprise suites like Microsoft 365 and Dynamics, allowing AI functionality to be directly embedded into workflows, though its partner onboarding and incentive mechanisms have relatively high barriers and more complex processes.

Google Cloud takes an engineering-oriented approach, emphasizing flexibility and customizability, but this also places higher demands on ISVs' self-expansion capabilities.

Alibaba Cloud activates local ecosystems with low-code development tools like PAI Studio and ModelScope, providing resource support, though its Marketplace ecosystem remains relatively fragmented.

These differences are crucial. Choosing the right partner depends not only on technical compatibility but also on whether vendors can provide needed market support at different growth stages for ISVs. For example, AWS Marketplace helps ISVs gain customer trust and market recognition more quickly in new regions through integrated procurement, billing, and brand exposure mechanisms. This model is particularly critical for Chinese ISVs in early internationalization stages, as they commonly face dual pressures of insufficient brand recognition and compliance challenges.

**Four Stages of ISV Growth**

Looking ahead, ISVs' growth path in the generative AI field can be divided into four stages:

**AI Ready (Exploration Stage)**: Experimenting through APIs or demos to explore feasibility. The focus at this stage is validating simple scenarios with clear value and high usage frequency (such as customer service automation) to quickly demonstrate effectiveness.

**AI Embedded (Deepening Stage)**: Integrating generative AI into existing products and conducting early pilots. The key here is refining minimum viable products (MVPs) around clear value points and continuously optimizing through real customer feedback.

**AI Native (Co-creation Stage)**: Further embedding agent capabilities such as orchestration and tool invocation. Success depends on improving visibility in cloud marketplaces and accelerating market trust and adoption through co-sell programs.

**AI Driven (Ecosystem Stage)**: Becoming ecosystem leaders, achieving replicable solutions and international expansion. The focus is on deepening co-branding partnerships with cloud providers and breaking through growth bottlenecks using overseas expansion and ecosystem extension programs.

Currently, most ISVs remain in the first two stages, still exploring reusable application scenarios and sustainable pricing models. However, as commercialization accelerates, cloud providers that can offer end-to-end support—from technical integration to sales expansion—will become ISVs' most valuable partners.

It's projected that by 2028, generative AI will bring approximately $158.6 billion in market opportunities for partners. To truly unleash this potential, ISVs and cloud providers need to collaborate in creating scalable, deployable solutions that enable enterprises to adopt with confidence and see substantial results. Only then can generative AI move beyond the experimental phase to become a core force driving a more resilient, value-oriented AI economy.