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Why do traditional boxed software companies have their heads in the cloud?

By Andrew Pollack on 03/20/2009 at 09:28 PM EDT

Have you wondered, even a little, why it seems the big software companies are so hot for cloud computing? To find the answer, look at your cell phone and your credit cards.

Back in the day, you'd buy a piece of software and use it as long as wanted. You didn't pay more money for the same software unless the vendor came up with a good enough improvement to be worth upgrading. Next time, you might just by someone else's software.

That wasn't good enough for software companies though. Not too long back they changed the model. They decided that you don't actually own the software you paid for. You lease it, and if you don't keep paying every year then you're "out of license". If you're "out of license" then your upgrades cost more.

Still, it isn't good enough. Only the biggest companies are playing the annual licensing. Consumers aren't. They buy their operating system with their PC -- at huge discounts given to the manufacturers, and maybe they buy their office software once, then use it for 5 years or more. Or worse - you get a copy of their software from a friend.

You can't keep using Software as Service if you stop paying for renewals

Software as Service requires servers & bandwidth that cost money. Open Source has to compete on a more level playground. To absorb the costs of sufficient bandwidth and servers, they'll have to charge for the service too.

You can't pirate Software as Service.

There's no getting around it.

To the software houses, Cloud Computing is about milking that $10, $20, or more from you every month. Forever. It's about your lunch money. Your morning coffee money.

See, once you're in the cloud you stay in the cloud. It takes serious effort and some skill to move back off a vendor's cloud site and keep your data. Switching to another vendor? That's even harder. You've got to figure out how to get your data out and how to mass import it into the new vendor.

Once you buy into that $15 a month office suite, you'll be paying that $15 for a long time. In the end - just like with credit cards, coffee stores, and cell phones -- you'll always be paying it.

Remember when you didn't pay for TV?

Remember when you didn't pay for Radio (a lot of you do now)?

Don't be fooled by the free sites that are out there now. SAS (Software as Service) is better spelled SA$.

There are  - loading -  comments....

re: Why do traditional boxed software companies have their heads in the cloud?By Dragon Cotterill on 03/21/2009 at 05:38 AM EDT
You missed an extra $. $A$.

OK, here is one of my biggest gripes about this. I don't care about the
software... what I care about is my data. It's mine. It belongs to me, and I
need it to always be available. Putting your data out on the cloud gives me
huge potential barriers to it. What if I can't get a net connection? What if
the SAS provider is upgrading their servers at the time I need it and I can't
get to it? What if they go bust?

Sorry, but putting your most needed business data out somewhere, where it is
out of your control just doesn't make sense to me. I need it right here, right
now, whenever, wherever.

There are always free versions of whatever you need. Let the big boys pay for
their premium rates, but for small businesses and consumers it just doesn't
make sense at all.

BTW, my credit cards are free (so long as I pay them off every month), as is my
phone service (Skype for outgoing to friends, free for only incoming calls on
my landline).
re: Why do traditional boxed software companies have their heads in the cloud?By nasim on 05/27/2009 at 02:40 PM EDT
this is my best subject
re: Why do traditional boxed software companies have their heads in the cloud?By Curt Carlson on 03/21/2009 at 04:32 PM EDT
Just goes to show that people will buy anything if it is packaged in an
"appealing" way. If you told me 20 years ago that a company could get away
with selling water...yes water, (the same stuff that comes out of my faucet for
free) for 4 bucks a bottle, I would have said you were crazy.
re: Why do traditional boxed software companies have their heads in the cloud?By Erik Brooks on 03/22/2009 at 10:45 AM EDT
You guys are stuck thinking of SAS in terms of small-time apps, like e-mail.

My company exists exclusively to offer SAS, and has for years. We have a
monstrously large app (on Domino, for the record) that, unless you've got a
million bucks to spend on your own AND want to wait a couple of years for it to
be built, it makes perfect sense for customers to lease from us. Especially if
you're an SMB.

You'll spend less money and receive a better product faster and with less
effort than doing it yourself.

We don't guarantee uptime (though we are financially driven to keep it as high
as possible), but we do guarantee that data ownership is yours (while software
ownership is ours), and we will provide you with your data (when asked) within
a reasonable timeframe.

Now, we don't charge a flat per-month fee. We charge per-transaction, and our
bills end up far beyond $10 a month. So maybe that's part of the reason we
give great service compared to typical cloud offerings (e.g. email)? None of
our clients are "just one account".
Actually, Erik -- I have a service based businessBy Andrew Pollack on 03/22/2009 at 12:31 PM EDT
Second Signal is entirely a monthly fee based service business. These have
always existed, and they'll continue to exist.

Your's isn't cloud computing and neither is mine. Its a business service.
There's nothing about them that isn't completely traditional. They don't make
sense as standalone applications.

I wish you success in yours -- though I'm not sure why you'd want to make your
point quite the way you did.

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