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BT Ben Thompson Ben Thompson Writes Stratechery, a subscription newsletter analyzing the business strategy behind tech and media companies, and has built a reputation for framing how platfo...

“You tend towards this very low volume, very high-cost weapon systems because you're just serving one customer. It's like the subscription business. In the subscription business, you want to maximize your revenue per user because you don't have as many users. If you're selling to only the government, you want to maximize your revenue per item because you only have one customer. If you're serving the entire market, then you make it up in volume. And so the future of war is, in my estimation, clearly things like drones, missiles, unmanned things, which is a volume play. All of our defensive primes are not built around volume plays.”

Sharp Tech with Ben Thompson · Tech Strategy & Big Tech · October 2026

“You tend towards this very low volume, very high-cost weapon systems because you're just serving one customer. It's like the subscription business. In the subscription business, you want to maximize your revenue per user because you don't have as many users. If you're selling to only the government, you want to maximize your revenue per item because you only have one customer. If you're serving the entire market, then you make it up in volume. And so the future of war is, in my estimation, clearly things like drones, missiles, unmanned things, which is a volume play. All of our defensive primes are not built around volume plays.” — Ben Thompson, Sharp Tech with Ben Thompson

Context

Thompson is arguing about the U.S. defense industrial base. Just before, he said the World War II arsenal of democracy worked because civilian car factories were repurposed for military production, and that today's military contractors serve only the government. This passage is his explanation of why that single-customer model pushes toward low-volume, high-cost weapons.

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Transcript

Sharp Tech with Ben Thompson Around 1:08:35 into the episode
Ben Thompson

…we don't have that capability. What do we switch to making all this military stuff? All our military contractors, because they only serve the U.S. government, they end up, number one, the U.S. government is stuck with these insane entities that all they exist to is basically the U.S. government.

Speaker 3

Right.

Ben Thompson

But then also you tend towards this very low volume, very high-cost weapon systems because you're just serving one customer. It's like the subscription business. In the subscription business, you want to maximize your revenue per user because you don't have as many users. If you're selling to only the government, you want to maximize your revenue per item because you only have one customer. If you're serving the entire market, then you make it up in volume. And so the future of war is, in my estimation, clearly things like drones, missiles, unmanned things, which is a volume play. All of our defensive primes are not built around volume plays. The consumer market is how you get sufficient volume. Do we

Andrew Sharp

need to fix the regulatory regime to enable the flowering of a domestic drone industry for the sake of national security?

Ben Thompson

Yes.

Andrew Sharp

If we're going six-dimensional chess. Yeah. Maybe we do. No,

Speaker names come from our own diarization. The position is estimated from where the line sits in the episode.

More from Sharp Tech with Ben Thompson

“About 50% of their revenue is coming from the big three via those services. So it's coming through AWS, coming through Azure, coming through Google. And it is confirmed that they're doing kind of sketchy accounting, depends how you want to define it, which is if you pay Amazon $100, that … Anthropic is recording that $100 as revenue. Anthropic revenue. And then in reality, like 30, a third of that or so depends, it sort of varies. I think people were saying about 37% goes to the provider, the platform provider, the AWS, the Azure, the Google.” — Ben Thompson, Sharp Tech with Ben Thompson “How do you improve the top line? Multiplying humans, right? There's this difference between multiplying versus replacing. And when you're multiplying humans, you're basically creating entirely new things to do, new workflows, new opportunities. The challenge for this whole trade in general is that usually number one takes longer. And number two, usually comes from new companies that they come in, they disrupt the incumbents by virtue of the AI first company taking on the old school SaaS company. The SaaS company is trying to shove AI and use it as much as they can, but they're just fundamentally not constructed properly to do it. And so, in the fullness of time, those companies go away. The AI native companies take their place, and that's how AI takes over the world. I think there's a very decent chance that that's how it happens. The problem is it takes a long time. And timing is the issue.” — Ben Thompson, Sharp Tech with Ben Thompson