Enterprise IT ISVs are Driving Market Interest in Cloud Computing Options

We’ve written frequently in this blog on the topic of cloud computing. Specifically, we’ve discussed the claims made by other reporters on actual levels of demand from enterprise IT markets for cloud systems. We’ve tried to consistently inject a skeptical, contrarian view into the discussion. Much of our opinion can be directly attributed to realities:

  1. an ample amount of published material on the topic of enterprise CIO reluctance to part with the control, and relative security of on premises data centers.
  2. and, as well, lots of published material about what seems to be an ever growing number of successful attempts to compromise prominent cloud applications and web sites by malicious parties.

Based upon these two points, up until very recently, we had a lot of confidence in the correctness of our position.

But now we need to acknowledge that the claims of growing interest on the part of enterprise organizations, which have been widely publicized are making more sense. What we’ve determined is that the real driver of this emerging trend is not the enterprise consumer. Rather, we see ISVs like Oracle, Microsoft, Adobe and even OEMs like HP and Dell creating this wave of interest, by actively prodding CIOs to move forward on a transition to cloud computing options.

We think ISVs see cloud computing options as a method of substantially lowering a whole set of costs that would otherwise be necessitated by continued development of on premise, per machine systems. It doesn’t take much thought to understand that writing browser client is, in fact, a much less costly undertaking than writing Windows, and/or Mac OSX clients. Further, cloud applications can be updated once to serve many, many — if not thousands — of end points. Bottom line: cloud delivery affords ISVs a viable method of squeezing more legitimate profits out of a production system that has become truly a commodity for enterprise markets.

Of course, our position is predicated on our assumption that desktop computing applications, including familiar office applications, together with collaboration solutions and document retention systems, have all become enterprise commodities. As commodities, the real task for manufacturers is to lower actual product costs to ensure the profitability of products. There are few, if any less expensive methods of serving and maintaining systems than via web servers and browser clients. Therefore, we can’t help but conclude that ISVs are doing much more pushing than markets generally appreciate — and for good reason.

If we can accept this position as highly plausible, then the recent changes in fortune for PC hardware manufacturers makes more sense, as we will explore in the next post to this blog.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved

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