In our prior post to this blog, we posited our view that the cloud and managed services trend, where enterprise IT organizations migrate delivery of applications from on premises servers to remote servers, which are accessed, by browser clients, over the wide area network, is, truly, accelerating. What we find interesting about this trend is that the driver can be found in the ISVs, themselves, who stand to benefit from a much lower cost of producing, delivering, and maintaining these systems.
Bottom line, these ISVs (like Microsoft, Oracle, SAP, Salesforce, etc) are pushing their customers up this road. Writing software once for many users to access via the cloud is a lot less expensive than producing shrink wrap versions of the same software that have to be loaded thousands of times on different servers, networks, etc. Production costs have to be lowered if these ISVs are to maintain profitability.
This type of market is entirely consistent with the type of market that emerges for commodities. As we see it, most desktop computing applications, and even more specialized applications like customer relationship management applications, etc. have devolved into mere commodities for enterprise IT consumption. If word processing, spreadsheet, CRM, accounting and collaborative software systems are looked at from this angle, meaning strictly as commodities, the shift in hardware purchasing from laptop and desktop PCs, to low cost smart phones and tablets makes sense.
In fact, desktop and laptop computers have, in 2012, been supplanted by less expensive and more portable devices as the direct result of the fat that, since the mid 1990s, these computing devices have served as no more than a conduit to commodity applications, for most users. The computing capability of this hardware has constituted a feature that only a small percentage of users have exploited.
Inadvertently, PC manufacturers have failed to follow a cornerstone of modern technology product marketing, namely, serve up to the market the barest possible feature set and see what happens. The fact that PCs offer more computing capability than the largest segment of the target market requires resulted in a dangerous (if not fatal) vulnerability, which innovators like Apple and Google successfully exploited with the debut of low cost tablets and smart phones, which are both capable of browsing the Internet, processing desktop applications, and serving up a movie or two as well.
In the next post to this blog we will explore how ISVs, like Microsoft, contributed to this vulnerability.
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