The Cloud Thickens

04 August 2008

For several years now it seems, pundits have been talking about software as a service (SaaS) and how it's about to take off. This is the idea that people would prefer not to buy their software outright, but to rent those bits they need. Of course, in order to facilitate rented software, you have to have a medium for distribution, and furthermore one with high bandwidth. Enter the broadband Internet, and for the first time we're getting close to having SaaS a day-to-day reality. SaaS and broadband are known ubiquitously as Cloud Computing.

Many times though, it's hard to see where the payment part of "renting" comes in. Many services and many SaaS sites are free, and I would guess they rely on advertising revenue or premium levels to make their profits.

Some examples:

  • Amazon Web Services. Essentially in two parts: S3 (Amazon Simple Storage Component) and EC2 (Elastic Compute Cloud). With S3 you pay for storage of data, both in terms of the amount of data and in transferring that data to and from Amazon's servers. With EC2, you pay for virtual web servers to serve up your web application. Using Amazon's services you can easily set up an online presence selling things (even software) without have to fork out a lot of money for servers and high-bandwidth Internet connections.
  • Flickr (and Picasa and photobucket and ...), the photo sharing sites. Yes, you can use Flickr for free to share your photos with everyone you want, but you can also pay money for the advanced tier allowing you more storage for photos (and believe me you soon reach the free limits). Flickr also gives you access to Picnik, which gives you the tools online to edit your photos and also comes with a premium service. With Piknik, there's no real need for a local install of Adobe Photoshop, for instance (unless you are into lots of messing around tweaking digital photos).
  • Mozy (and JungleDisk and Carbonite and ....), the online backup services. Essentially lots of online data storage and a backup program that copies your files (and compresses and encrypts them) to that data storage. JungleDisk in fact uses Amazon's S3 as the data storage. You pay a flat fee or a fee depending on the amount of data you transfer and the storage used.
  • Tax return preparation. Many tax preparation software companies now provide you the opportunity of preparing your tax returns online and electronically sending them to your "favorite" government Revenue department. OK, the computing part of this is not that onerous (what did you make? how much do you have left? send it; so the old joke goes), but the rest is.
  • Lulu. Create and publish your own book online. OK, the preparation of the book and the print-ready PDF is still a "think-client" activity, but the rest is pure cloud computing. The money is made from when a book is actually printed: Lulu take their cut then.
  • Google's online "office apps": calendars, email, sharing word-processing documents and spreadsheets and whatnot. Free for individuals, but Google would love to sell you their services if you are a business.

This brief non-exhaustive set of examples shows that Cloud Computing is already here and making inroads into the normal retail channel. Companies like Microsoft, Google, IBM et al are pushing a lot of money into Cloud Computing and it seems that if you miss this particular boat you're toast. Heck, even BusinessWeek has just published an article about it, saying this:

Some analysts say cloud computing represents a sea change in the way computing is done in corporations. Merrill Lynch estimates that within the next five years, the annual global market for cloud computing will surge to $95 billion. In a May 2008 report, Merrill Lynch estimated that 12% of the worldwide software market would go to the cloud in that period.

Using anyone's yardstick, that's a lot of money.

(You can also see how important this whole thing is: recently Dell applied for the trademark "Cloud Computing" and on July 8 this year gained a Notice of Allowance. They now have to file a Statement of Use in order to go to the next step, registration of the trademark.)

In looking at all this, there's one area where I don't see much movement: Programming as a Service. How soon will we be able to use Visual Studio in the cloud? Basically, log into some website, spawn off a new instance of Visual Studio, say on a virtual machine, and program at a distance? Or even this: have a web development hosting website where you go to develop web software and publish it to an affiliated web hosting company (think editing your photos in Piknik and publishing them to your pages on Flickr)? Maybe not ASP.NET, but using Rails or Silverlight or Flex, say?

I'm going to guess this is all closer than you or I think. Maybe a couple of years away? And how does this affect what we, DevExpress, do (selling frameworks and UI controls and so on)? That's to be thought about and discussed in the interim. See you then...

6 comment(s)
Scott Woods

Nice article.  I am looking forward to Julians answer to his last paragraph.  We work on a traditional desktop application and are having a hard time knowing when to move into the clouds.  It is not so much a question of technology, but when will our customers be ready.

4 August, 2008
Steve Sharkey

Whenever I have talked with clients about leasing/renting of software they have always been extremely cautious. They are under the impression that they will lose control of their costs. If they have a bad year next year they can simply carry on using Office 2003 no need to spend money moving to Office 2007 or whatever, where as with the renting scenario they are "automatically upgraded", have a continuous on going cost and have to deal with upgrades that would "inflict" learning on their users.

Having said that maybe I just have peculiar customers - they say things like why should we pay maintenance on an application can't we pay per incident (I have pointed out that this would encourage me to make incidents where as the maintenance model encourages me to produce bug free, reliable code....

5 August, 2008
Linton

"How soon will we be able to use Visual Studio in the cloud?"

You can do it today! Check out Microsoft Virtual Labs msdn.microsoft.com/.../default.aspx

5 August, 2008
ctodx

It seems that someone at the US Patent and Trademark Office (USPTO) finally realized that "laughingstock"

6 August, 2008
Bill Hazelwood

In 'Cloud computing', where will the data be stored? If it is outside of the company, I can see alot of heels digging in. I mean, who would use an Accounting SaaS package?

12 August, 2008
ctodx

OK, this has nothing to do with Developer Express, but is merely a rant about an article in The Guardian

1 October, 2008

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