Is Productization the Future of APIs?
A view of what this year can look like based on trends from the last three months
What will the future hold for APIs in 2024 and beyond? That's what Matthew Reinbold asked us on the invitation to participate in the APIFutures initiative. We obviously accepted the challenge, even though we're not fans of crystal ball predictions. So, we took the opportunity to analyze how the API industry looked like from October 2023 to December 2023 and extrapolate from there into 2024.
During the last quarter of 2023, we published 11 newsletter editions with a curated list of announcements, news, and articles ranging from AI to security. With a total of 235 articles hand-curated from over 400 items, we noticed a few trends:
API-related funding was over $800 million: Most of the investment was obtained to cover Series A and lower rounds. This indicates an interest in fostering the creation and growth of API-related products.
APIs have been supporting existing products: We noticed announcements from companies such as Amazon, Apple, Bloomreach, Cloudinary, General Motors, Maersk, and Meta. All these were related to new APIs being launched to open existing products to integrators.
API product landscape was rich and diverse: Announcements of API products came from areas such as AI, finance, gaming, health, media, sports, and wealth management. We've seen news from API product companies like Alpaca, Crezco, Diamonds Direct, Flanks, Radar, Railsbank, Silverflow, OurSky, and Trackstar, among others.
These trends, along with what we're already seeing in January 2024 make us believe that in this year you'll see many more companies building API products. Not only that but already established companies will contribute to a growth in API usage as product enablers. We're just 10 days into 2024 and we're already seeing companies like Deutsche Telekom, Fimple, and Walmart using APIs to enhance and deliver their products to wider audiences.
The case of Walmart is very interesting as it enables the sale of physical items inside virtual gaming experiences. According to their announcement, this integration opens the door to in-game monetary transactions and developer monetization. Fimple, another example, is a composable banking platform. They even call themselves a "Financial Function as a Service," to enhance their offering as something that you can integrate into other products.
It's products and companies like these that make us believe API productization will be a growing theme during 2024. Using APIs as standalone products or as a distribution channel for new and existing products—even physical ones—is something you'll see more often. Managing APIs as products isn't something esoteric that only a few people do. It's becoming the norm as a growing number of businesses adopt APIs as one of their revenue sources.
With that, the growing role of API Product Manager will be more prominent inside companies of all sizes. These are people who have a set of skills to take something as technical as an API and translate it into a business asset. Among those skills, you'll see a growth in API management, documentation, and observability. SmartBear, for instance, announced its distributed tracing solution in October 2023. In November, Zuplo raised its seed round to help companies launch and manage their APIs. And finally, in December, Hookdeck announced its evolution to a platform offering features such as event observability.
All these companies can't be wrong in the bet they're making on API productization. While we don't have a crystal ball we can say these are strong signs of what can happen throughout 2024. We'll continue delivering our hand-curated API-related content and let's see where we'll be in December.