There is an interesting article about on-demand computing at BusinessWeek. Most texts you read about this topic these days claim that cloud computing is a serious threat for traditional software vendors, because the software-as-service (SaaS) model does not allow the same high profit margins as licensed software does. The BusinessWeek article is a bit more balanced. I do not think that the profits of traditional software vendors will change just because of the Internet. For customers, this means that software will not get cheaper.
I think that one has to distinguish two different questions here. One is whether cloud computing or on-demand computing will replace traditional computing, and the other is whether software companies will earn less in the future.
The rise of on-demand computing has been predicted for many years. BusinessWeek makes clear that these things will not change as quickly as many believe. However, let us assume for a moment that someday all our apps will run somewhere in the big Internet cloud. Would this really be a problem for traditional software vendors?
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