TLDR: A new report from Omdia highlights that while Generative AI (GenAI) is reshaping the cloud landscape, over 60% of enterprise initiatives remain in the proof-of-concept phase. Independent Software Vendors (ISVs) and cloud providers are positioned as central to overcoming challenges like high costs and talent scarcity, with GenAI expected to generate $158.6 billion in partner opportunities by 2028.
Omdia, a leading technology research and advisory group, has released a new report titled ‘The next phase of GenAI: ISVs and cloud providers at the center,’ authored by Yi Zhang and published on October 13, 2025. The report underscores the pivotal role of Independent Software Vendors (ISVs) and cloud providers in advancing the adoption and scalability of Generative AI (GenAI) solutions within enterprises.
The report reveals that despite the global wave of innovation unleashed by GenAI, its path to widespread adoption remains uneven. Omdia’s research indicates that a significant hurdle exists, with more than 60% of GenAI initiatives currently stalled at the proof-of-concept stage. Production deployments are highly selective, primarily due to persistent challenges such as high compute costs, complex integration requirements, and a scarcity of skilled talent.
According to Omdia’s analysis, ISVs are emerging as critical partners to bridge this gap, facilitating the transition from experimental pilots to full-scale production environments. The market intelligence firm forecasts a substantial opportunity, projecting that GenAI will generate US$158.6 billion in new opportunities for partners by 2028, with ISVs being particularly well-positioned to capitalize on this growth.
The global GenAI software market is anticipated to experience robust expansion, with projections showing an increase from US$26.3 billion in 2025 to US$101.3 billion in 2029, representing a Compound Annual Growth Rate (CAGR) of 48.1%. The Asia Pacific region is expected to outpace this global growth, with its market climbing from US$6.4 billion to an even higher figure within the same period. This region is already serving as a proving ground, characterized by accelerated hyperscaler build-outs and Chinese ISVs expanding their international presence.
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Cloud providers, particularly hyperscalers, have strategically placed AI foundation models at the core of their offerings. The report also touches upon the rise of Agentic AI, autonomous agents capable of reasoning, planning, and acting, further shaping the evolving AI landscape. However, the report emphasizes that overcoming the technical and commercial hurdles faced by ISVs will be crucial for unlocking the full potential of GenAI and driving its scalable adoption across various industries.
