Web Applications Reset the Playing Field

I’m not generally in the habit of republishing unconfirmed rumors, but I read a couple recently about the possibility of Apple releasing cloud-based, software as a service (SaaS) versions of iWork and iMovie this week that got me thinking about SaaS. Perhaps this is an obvious point, but it only just really became clear to me, so I thought I’d share: SaaS resets the playing field.

As software applications move to the cloud, once dominant leaders will be challenged by new upstarts. Microsoft Word will face a real challenge from the likes of Google Docs and Zoho Writer. Quicken and Money may be challenged by the likes of Mint or Cake Financial. Photoshop will face competition from online apps like Aviary, Pixlr, Splashup, and Sumo Paint. iMovie may find itself playing catch up to web-based applications like JayCut. PowerPoint will get a run for its money from SlideRocket and 280 Slides.

Whether or not Apple really does push iWork or iMovie into the cloud this week at MacWorld doesn’t really matter (though it would be cool if they do), the point is that Apple and other companies have an amazing chance, due to the growing popularity of software as a service, to compete in areas they were never before competitive.

Currently, iWork is a non-competitive desktop office apps suite, for example. Even though it stacks up to Microsoft Office on features in some cases, iWork remains only a niche Mac product because so many people already rely on Office that compatibility issues generally force people to shell out for it. But an online, cloud-based, cross-platform version of iWork would be different. There are no established leading web applications for word processing, spreadsheets, or presentations, so any app developer has a shot to compete with the current heavyweights of the desktop world.

SaaS resets the playing field and erases established leaders from the discussion — the desktop versions so entrenched in our lives no longer matter once software completely moves to the cloud — if it does, so the door is wide open for new competitors. That’s why SlideRocket, a web-based application initially developed by one person, may end up taking down PowerPoint. That’s why 37signals, a bootstrapped company with just a handful of employees, can take on Microsoft Project with Basecamp, and why Salesforce.com has been able to take on SAP and Oracle.

The web apps mentioned in this post generally don’t compete with their desktop counterparts feature-for-feature. If they were desktop apps, they probably wouldn’t have a chance to compete because people would dismiss them for not stacking up feature-wise, or for having compatibility issues. But web apps gets some leeway. People don’t expect them to be as feature rich yet, and convenience and accessibility make up for lack of features. Further, compatibility issues matter less with web apps because you can usually just share work directly via the app with a collaborator.

And because the software as a service model makes it easier to push out updates to all customers at once, SaaS apps have so far generally been more agile and able to iterate and improve a lot faster than their desktop counterparts. SaaS wins when it comes to convenience, accessibility, collaboration, and agility — so they get a pass on features for now.

As I said, these might be obvious points, but they only became clear in my mind recently, so I thought I’d share. If you agree, disagree, or have something to add, please respond in the comments below.

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  • http://www.aradiom.com Michael Larsson

    SaaS is actually pretty old and has been around in many different incarnations.
    In the 1980s it was touted as “client server” architecture. The 1990s introduced us to Application Service Providers (ASPs). The difference now I think is that we have the almost “always-on” internet and mobile connectivity that did not exist before. The company I work for provides mobile extensions to “cloud computing” or to existing back-ends but I think SaaS will be one of the plays but not necessarily reaching critical mass for the next ten years, as some companies still use IT as a competitive advantage.

  • Roy

    Michael I disagree with on “client server” being SaaS. It’s not! It’s like saying the Internet has been around since the 1800′s because we had telephone lines.

    I work for a SaaS international vendor. Believe me SaaS is taking off now not in 10 years like you claim. Look at Microsoft, IBM, HP, Apple, SAP, Oracle, NEC, Cisco, BT, Telstra, all but to name a few. They are all panicking trying not to miss the boat while some more younger SaaS companies have jumped the gun and really taken off. This is the NOW not in 10 years as you claim. With the amount of capital Google have to invest, they will become the next powerhouse in the IT world and will be the number one force in SaaS.

  • Anonymous

    37signals’ Basecamp does not get a pass on features because it’s a web app. Basecamp wins because it cuts through the cruft and provides better tools to communicate than Project does. Do you really think customers say “oh, Project has more features and suits my needs better, but I’ll forgive Basecamp it’s lack of features because it’s a web app and use it instead?”

    If Microsoft Project Online came out tomorrow, offering the same use-anywhere convenience Basecamp does, most Basecamp customers would still prefer Basecamp. We don’t want more features. We want a tool that helps us communicate, then gets out of the way.

  • http://www.mockriot.com/ Josh Catone

    @Anonymous: I was speaking more generally when I said that the conclusion, so not every point is pertinent to every example. But in a way, I think that yes, many people — especially in the enterprise — do say that. I think a lot of people buy features they never even use and don’t realize they don’t use them until they try an alternative that nixes the unnecessary bits. The main point of my post was that because web apps and SaaS is starting to take off and be accepted by both mainstream and enterprise consumers as a legitimate way to purchase software, there now exist more opportunities for those alternatives to compete.

  • iron60

    I agree that cloud based apps will become the next generation mode for computer work. I have been using Google Docs for over a year now and while I don’t get the same features as Word, there are some shining positives – collaboration, & storage specifically. As one who has lost data more than once, it’s nice to know that Google is responsible for mine… I have more confidence in them than I do in myself! And as a traveler, it’s great to not have to rely on flash drives anymore. My prediction – in 5 years laptops will no longer reguire hard drives.

  • Jijesh Devan

    Josh, as a SaaS evangelist working for QLogitek, a SaaS supply chain solutions provider to retailers, I agree with your views broadly.

    I think the big difference between SaaS model and it’s competing on-premise model for enterprises are few: 1)SaaS is a multi-tenant delivery model that provides stellar service at 2)low capital investment while ensuring a 3) overall lower total cost of ownership.

    I am very optimistic that SaaS will become (more) mainstream in the consumer and enterprise software market.

  • http://altoonadesign.com halfasleeps

    My prediction – in 5 years laptops will no longer reguire hard drives.

    Then where will your OS be installed? as firmware? no thanks.

  • http://www.sitecritic.net bpeh

    I think we still need to give at least 5-10 yrs before RIA becomes truly popular. To beat MS Office or photoshop is easier said that done unless microsoft or adobe decide to develop the online version themselves…. but even then, the internet connection has to be super duper fast esp for heavy apps.

  • Raja Sekharan

    @halfasleeps,

    You will be buying personal space on a ‘cloud’. Your computer will connect to the cloud every time you switch it on and boot over the network. You can access your personal workspace along with all its settings from anybody’s computer.

  • neildonald

    Can’t agree with much that people have said here. I see little in the way of tangible benefits in using cloud apps to the majority of end users. It seems that huge sums are being spent on making web apps as good as desktop counterparts? But why? You can buy a netbook for £/$200 which is more portable, convenient, responsive and featured than any cloud service ever will be. For home users, TCO isn’t even on the radar and most rational businesses wouldn’t dream of using a cloud service for general tasks like word processing and spreadsheet because desktop model works, is inexpensive and reliable. I’m not completely blind to the benefits of SaaS.

    As for the diskless notebook, well Thin Clients have been around for ages and perhaps this is stumbling towards what I think the future is. Rather than try and contort html, javascript and web server scripts to impersonate an OS, there is more mileage in offering an internet hosted windows-based virtual PC over RDP or ICA. Renting a hosted windows desktop and storage with a choice of apps in a fully managed, patched and secure environment sounds better to me.

  • Maximus

    @neildonald – The next wave of innovation in productivity apps is here and it’s online. MS Office hasn’t changed that much since 1982 and all they’re promising in the next release is more ribbons (which many people dislike). Online Apps like SlideRocket let you streamline your workflow by giving you immediate access to both free and paid content online that you can quickly integrate into your presentation, let you tie in dynamic data to your slides so your content refreshes automatically, let you extend the app with plug-ins, let you collaborate easily with your colleagues, let you centrally manage a library of presentations and assets for your organization in a secure location that is backed up and archived (and has version control) rather than on your laptop which probably has none of those. You also don’t have to wait 18 months to two years for the next release, new features are available regularly. Many of the online apps also have offline counterparts to let you sync your content as needed, I could go on. Even Microsoft agrees that online is the future by offering software + “services” in the next release. It’s time to wake up and try some online apps, you might like it.

  • neildonald

    Hi maximus, i had a look at the demo on sliderocket and it looks a really cool piece of software capable of producing better looking presentations than powerpoint and all it’s clones. The collaboration features also seem impressive. In fact, I’ll probably use it for next presentation. I’m intruiged that you menion many of the online apps have offline counterparts and this would go some way to challenging my general reservations.

    However I’m not moved to change my mind about the likely adoption of these applications. Most regular folk go to the local computer superstore and buy a mediocre PC with a mediocre productivty suite like MS Works on it. They type the odd letter and maybe do the odd bit of homework. They send and receive emails using a mediocre email client like Outlook Express, browse the internet with a mediocre browser like IE.

    I would like to challenge this but ultimately most regular folk are blind to this mediocrity as what they have is good enough. I can’t see any significant driver for the paradigm shift which the move to cloud computing. Unfortunatly just becuase something is better than the alternatives doesn’t mean that it “wins” – eg Betamax, Minidisk, HD-DVD and so on.

  • Sahil

    This is very true. SaaS seems very logical at the present moment when broadband is everywhere, people are working virtually and are mobile. Why would a business pay hundreds of dollars to buy software when they can rent it for a small monthly fee?

    SaaS is here to stay.

    Sahil
    Founder, DeskAway.com