One should think of software companies(especially Saas) through the lens of supply chain.
Let’s take an example of Batteries. Here is the supply chain of a battery
Cobalt is an essential element in making of batteries. It is mined majorly in Congo. It is then supplied to countries like China, which process it and make lithium ion batteries. It is then supplied to manufacturerers around the world for using it in phones, cars etc.
Now, there are different companies operating at different level of the supply chain. In technology, generally we have the tendency to compete at the last stage, while true profits lie at earlier stages. For eg - AWS. There are thousands of SaaS apps competing in the market, but since AWS owns the computation layer, it’s profits are uncomparable.