Commodification of the desktop operating system complete

OS X in Windows 7 in Chrome OS on Cr-48

So I read a great post the other day about the commodification of the client operating system. I surprisingly agree with the author. I think that's the way we're headed.

In Amazon style, Amazon would like us to get our commodities from Amazon. Several months ago Amazon released Amazon Workspaces.

Amazon WorkSpaces is a fully managed desktop computing service in the cloud. Amazon WorkSpaces allows customers to easily provision cloud-based desktops that allow end-users to access the documents, applications and resources they need with the device of their choice, including laptops, iPad, Kindle Fire, or Android tablets. With a few clicks in the AWS Management Console, customers can provision a high-quality desktop experience for any number of users at a cost that is highly competitive with traditional desktops and half the cost of most virtual desktop infrastructure (VDI) solutions. 

Pretty cool really. Cloud-based desktops were really unheard of before Amazon's release of Workspaces. Virtual desktops? Sure and they're terrible. Hosted desktops? Sure, and they're even worse. True cloud-based desktops before Amazon Workspaces? Nope.

With Workspaces a small business could have always up to date, always secure Windows computers at their beckon call. The device being used by the end user can be a system like Chrome OS which you can't really break. Starting Chrome OS up from scratch takes a few minutes at most.

Around the world today millions of hours will be spent messing with operating systems. Large corporations have entire teams dedicated to desktop support. Our idea of the operating system will soon be a distant memory, no more special or important than the black pen that runs out of ink, quickly interchanged with another without a second thought.

Chromebooks. Beyond Client-Server

Currently the #1 Best Seller in Computers & Accessories on Amazon.com is the Samsung Chromebook.

I'm very bullish on Chromebooks and ChromeOS and have been since testing the prototype devices almost exactly 2 years ago today. I'm excited by Chromebooks because they're simple. Simple is good.

Simple is the opposite of complex and as famed technologist Ray Ozzie notes in his Dawn of a New Day memo, complexity is not cool.

Complexity kills. Complexity sucks the life out of users, developers and IT. Complexity makes products difficult to plan, build, test and use. Complexity introduces security challenges. Complexity causes administrator frustration.

As someone who often plays the roll of administrator, or managing others playing this roll, I have a particular appreciation for the awesomeness that is simplicity. Ray Ozzie feels the same way as Leonardo da Vinci did some 500 years ago as he stated, “Simplicity is the ultimate sophistication.” Some things never change.

Amazon to be #3 in Mobile?

The New York Post is finally catching up to the Boy Genius Report (BGR) and posted a story discussing the potential release of two Android tablets from Amazon. I was going to find the link on the New York Post but their site is disgusting as are all of News Corps' sites.

I don't own an iPad. I think they're awesome and would love one but it's just too much to spend on a luxury item for me right now. Many smart people knew the iPad was going to be a homerun for Apple. It's pretty funny to read all the articles about Android taking market share from Apple, while I guess it could technically be true it's still nonsensical ... the tablet market is expanding exponentially, even the most bullish financial analysts are still greatly underestimating its eventual impact. Apple is going to sell a ridiculous number of iPads quarter after quarter for the foreseeable future. There will still be plenty of demand left over for several Android vendors to sell millions of devices of their own.

With HP's announcement that they will be shuttering the webOS business, the race for #3 in mobile is wide open. Anyone over 30 probably says "Microsoft" without much thought. Microsoft has the cash and the desire to be a long-term player in mobile. Microsoft, however, has a serious problem in that the very foundation of their entire business is built on a reality that no longer exists. The desktop is no longer the center of computing. History would suggest Microsoft has peaked along with the desktop. If Microsoft were to not only be the king of the desktop but also become the king of Internet services or the mobile web, Steve Ballmer would be known as the most effective executive in business history. Even Microsoft's biggest fans would find that far fetched. I don't think there's anyone better to run Microsoft, I also don't think there's any chance they'll move beyond their desktop roots.

So, if it's not Microsoft, who becomes a meaningful #3 in mobile? I think it will be Amazon. Amazon doesn't even sell a phone? Neither did Apple or Google. Apple and Google are the leading mobile Internet firms. Who's #3? Amazon. Most people's concept of a "phone" is terribly outdated. As is their definition of a computer. I make and take all my calls during the day on Gmail. I communicate via email, text, status update or messaging much more often than I talk on the phone. The most phone-like feature of an iPhone is its name.

BGR thinks Amazon might release two Android-powered tablets a dual-core and a quad-core called the "Coyote" and "Hollywood" respectively and priced accordingly and "hundreds less than an iPad".

Amazon already has the ecosystem going for it. They are the leading online retailer, they have their music storage service, the Kindle HTML5 App, their Android App store, and their #1 item is already a mobile device.

Everyone seems to think Amazon's Android implementation will be highly customized. Hopefully they get it right. Android is awesome and Amazon is awesome. Why take everything great out of Android to add in everything great from Amazon rather than combining everything great from both? A tablet that has the best from Google and Amazon would be outstanding!

Google and Motorola Mobility

Big news in the tech industry today with Google announcing they would be acquiring Motorola Mobility (MM), which is a separate company than Motorola Solutions, Inc.

If someone had suggested this move last week, I would have said "maybe but probably not, too many employees and it's a hardware business" although there were some people who saw a lot of potential with the move.

It's difficult to say what will happen to Motorola Mobility's 19,000 employees. Google has stated MM will be run as a stand-alone company but obviously having a new boss means setting new directions. If I were a MM employee working with Android I'd be optimistic. If I was working on older technologies, not so much.

This is obviously a big, bold move by Google. Could it be a "disaster" - no, Google had about $40B in cash when they made this move. Worst case scenario is that it doesn't pay off and MM could be spun back off. They actually got a pretty good deal for MM  - the price of $12.5B includes $3B MM has in the bank so the purchase price was under $10B. Sounds like a lot but Google also paid $1.65B for a technology to share videos. Motorola invented the mobile phone.

As the leading Internet and mobile OS company, I don't think there's much that Google could do at this point in history that would really throw them much off course. They're going to continue on an upward trajectory for the foreseeable future as are others.

I think Google's acquisition can and should pay off handsomely in two primary ways - one is short term, the other long term.

Short term.

Everyone knows the first reason Google agreed to acquire Motorola Mobility. They have 17,000 patents and some of the best in the mobile biz. Most firms cower from Apple's litigation team. Not Motorola, they actually went after Apple first and as the inventor of the first mobile phone, they've got some serious history on their side. For some perspective Microsoft has about 18,000 patents and Apple about 4,000.

The press has also been all over the fact that MSFT extorts payments from Android vendors like HTC. Guess who pays Motorola Mobility royalty fees for every Xbox sold? Karma is a bitch with a great sense of humor.

There's no question, should the acquisition be successful, that Google has "solved" their patent problem. (The system itself remains a disgusting waste of resources.)

Long term.

MM is the market leader in set-top boxes. All those DVR boxes we have on our TV's come from either Motorola or Cisco. You may have noticed something about your set-top box - it kind of sucks. Searching is awful, the hardware is disgusting compared with modern devices, the functionality is meh, Internet integration is typically non-existent (which is amazing considering TV and Internet services are often coming in on the same cable or at least from the same company), and the user interface hasn't really change that much in 10 years. With the acquisition (assuming it goes through) Google has just become the leading provider of set-top boxes? Holy shit, that's huge. Consumers have a lot to gain in this traditionally stagnant space.

Overall.

Google sends another signal with this move. Yes, they are a bunch of geeky engineers more concerned with innovation than patent litigation but they also have $40B in cash, won't be pushed around and everyone trying to can kiss their ass. Some are even speculating Google's pursuit of the Notel patents was a ruse - we'll never know. I tend to agree they would have been happy to win the bid but were aware they might not and were pursuing many possible patent acquisition options simultaneously - when they lost the Nortel bid they decided to go big. But to anyone who thinks the world's leading Internet company and leading mobile OS company is going to give an inch as the opportunities of the mobile Internet are realized you've been put on notice.

Other winners.

Amazon. They've been investing in Android with their marketplace, HTML5 apps and rumored Android powered tablets. Patents issues increased the risk of this investment. Amazon benefits from Android's new patent war chest without having to fork over the dough. Personally I think Amazon has more potential to be a long term mobile player than Microsoft, Blackberry, Nokia or HP.

Barnes and Noble's Nook. They've been fighting hard to protect their Android powered devices from litigation by Microsoft. Like Amazon, they should benefit from Android's new patent war chest.

Samsung, HTC, other Google partners. The MM acquisition causes some channel conflict but I'd bet these firms would rather have that conflict to manage than getting their asses sued or extorted left and right by Apple and Microsoft. A stronger Android means a stronger platform for these firms. Samsung is also a leading ChromeOS partner, a Google more invested in mobile computing is a Google more invested in Samsung. A look at the iPhone shows just how much quality and value Samsung components can add to Google phones, tablets and PC's. There's no reason MM does not take more, rather than less, advantage of foreign manufacturing partners now that its business model is a bit more dynamic to say the least.

Biggest losers.

Microsoft. They've been all over Android, basically making a business out of threats. "Pay us on your Android devices or get sued." The king of mobile patents is Motorola Mobility. With this move Google kills this "opportunity" for Microsoft. Microsoft even pays MM a royalty fee for every Xbox sold. Apple and Google will now both have hardware businesses at their disposal. Obviously Google will not match the profit margins of Apple but they don't need to - the firms have extremely different business models. Microsoft has tons of dough, they should just buy Nokia AND Blackberry. Revamp the hardware, optimize for Windows Phone 7 and shove the devices down the throat of every market on earth. It wouldn't be pretty or elegant but that's the only chance they have in mobile. Google just up'd the admission fee to play.

RIM. The phones are awful. The company's business model is obsolete. As everyone else gets stronger or consolidates into a larger player, Blackberry gets weaker. And just when everyone thought RIM couldn't be any more meaningless.

Censorship is not a sustainable strategy...

...it is annoying though.

It all started with the Kansas City Cloud Computing User Group which is under the .org top level domain which would suggest some altruistic attempt to educate our local community about modern computing services delivered via the Internet, commonly referred to as Cloud Computing.

Everyone knows the Internet is one of the most disruptive innovations in human history - in short, its development, massive adoption, and the dozens of attributes that make it, well the Internet, have really screwed up and even destroyed many business models and businesses. Pick up a newspaper lately? Me either.

The Internet of the last 20 years mostly consisted of text and links, maybe a picture or two. Web sites like blogs were able to publish content and distribute it on a global scale at almost no cost. This destroyed the capital intensive and complex business model consisting of massive printing presses and complex supply chain distribution frameworks. This Chart of the Day from SAI shows what the total destruction of a business model looks like.

The last decade has been horrible for the newspaper industry - the very foundation on which the businesses were built no longer exists. The businesses are no longer valuable and many printing presses are likely worth more for their scrap metal than printing a newspaper or magazine.

Fast forward to mid year 2011. Today's Internet is MUCH MORE than text, links and some pictures. Today's Internet is full of applications - from Email, CRM , custom applications, pure infrastructure, highly specialized applications, to applications to pop some pigs!

Modern Internet services already dominate our personal computing experience. We use Google.com to find everything under the sun, Amazon to buy just about anything we want, Facebook to connect with friends and family, Craigslist to sell old washing machines, Gmail for personal email, Linkedin for professional networking, Google Maps to check out a street view or get directions - the list goes on and on and on. We live on the Internet.

Internet services are beginning to dominate our business computing as well. Commerce Bank leverages Workday, Perceptive Software runs Salesforce.com and Google Apps, Kansas City Southern Railroad leverages Salesforce.com, St. Luke's Hospital System leverages Postini, Zarda BBQ runs on Google Apps as does the YMCA of Greater Kansas City. Soon Kansas City will be home to the world's fastest Internet and adoption of modern Internet applications will continue to accelerate.

Who's business model does this screw up? Well, if the Internet is now the platform delivering applications the desktop environment simply becomes a commodity. Generally speaking commodities are very inexpensive compared to other goods and services. If you buy nails at the hardware store, you don't care who manufactured them - they're nails. Contrast this to an iPad and you have two extremes.

Everyone knows the king of the desktop is Microsoft - they're king of the hill that is quickly beginning to look more like a molehill than a mountain. Here's another fun chart from SAI.

Look familiar? When the very foundation of your business model is completely disrupted you're screwed. Every business model eventually becomes obsolete.

Microsoft is an extremely competitive company and they're not going anywhere anytime soon. They're sitting on a mountain of cash and have tons of smart employees. But has Microsoft peaked? Absolutely. As the king of the desktop, Microsoft was intrinsically tied to the same destiny and the chart above clearly shows how their Internet services business is doing.

You can't hide from reality but you can try and shut it up and that brings us back to the Kansas City Cloud Computing User Group (kccloud.org). I was excited when I found out about the group. Cloud Computing has the ability to increase the capabilities of Kansas City businesses of all sizes, our nonprofits and other community organizations and our schools. Cloud Computing offers more function at less cost - this is great for consumers.

However, these facts are horrible for Microsoft where these same high costs drive record revenues and profits. In the "user group" I quickly noticed my ability to submit blog posts, videos and events to the site was "broken" - I submitted a trouble ticket to the site's administrator and was told, even though I was a full member, only information from or about Microsoft could be submitted to the "Kansas City Cloud Computing User Group" which is obviously anything but. To their credit, they didn't delete my previous posts but they were quickly buried under fresh content.

I thought about trying to start a real user's group for Internet services but choose to focus my efforts in other areas (these groups take TONS of work to start, build and maintain) and eventually forgot about the censorship ... until today.

Microsoft's Tony Tai wrote an article on the Why Microsoft blog that was blatantly misleading. I don't post there often because it's intended for a Microsoft audience but sometimes I do speak up when the post is so obviously incorrect - it's called lying in grade school. Tony had stated Gmail does not have filtering while it's been a feature for at least 5 years. I pointed this out, he responded and I was looking forward to providing some additional feedback but rather than having a discussion they've decided it's easier to pretend reality doesn't matter and I'm unable to post.

When information was expensive to publish and distribute this type of marketing could be extremely effective but today it's just annoying. The facts are everywhere.

Dear Kindle. I heart you.

I've always been a huge fan of Jeff Bezos. He has a vision for his company and what he wants to bring to the world and he does his thing. Today Amazon is an Internet giant, but early on its eventual success and very survival were often debated. Articles like this, this and this were common. I was very excited about the Internet, and Bezos was just such an optimist regardless of how much money they were loosing, how can you not root for a guy like that?

People continued to doubt Jeff Bezos even after Amazon has firmly established itself as the eCommerce leader as well as a leader in Cloud Computing. The Kindle is dead, they said. With the iPad the world had it's first full blown tablet. Bye bye Kindle. Yet, the Kindle has continued to be Amazon's best selling product and the 3rd generation model became the company's best selling product in history. Why?

I've always been an avid reader and read several dozen books every year. I consider books an AMAZING gift from the author - to sit down and spend an hour with Don Tapscott, Marc Benioff, Dale Carnegie, Peter Drucker, Seth Godin, Malcolm Gladwell,   Jim Collins, Michael Porter, Guy Kawasaki, The Dalai Lama - I mean how awesome is that! Hours of teachings from the world's greatest teachers are often available for less than the cost of a salad at an organic grocery store. These authors are the main reason I write this blog. I felt guilty for taking so much but not trying to give back anything. If one sentence on this blog adds any value, regardless of how trivial, to someone's day, well then I've given something back. I love books and was excited to check out the Kindle. It took me about 10 minutes to decide I was in love. Why?

E Ink 


I don't know how they did it, but I'm glad they did. Reading a Kindle is exactly like reading from the page of a traditional book. This is not an exaggeration. Avid readers will recognize this look immediately. Reading from a computer screen and reading from a book are very different experiences - when you read from a Kindle, you're reading from a book. When Bezos and team say the Kindle is in a different product category than an iPad this is what they're referring to. The Kindle is a reader.

All my authors come with me!


As an avid reader I'm usually working on several books at a time. I might be in the mood for one or the other or simply get board with one and switch it up. This means I have tons of books and often travel with several. Not a huge deal but books are heavy and I usually wouldn't take more than 2 - limiting my options. Shelf space was also a constant battle requiring a periodic offloading of books I knew I didn't want. Now my library lives in the Cloud. I can keep any books I want on the Kindle and keep them online as well. This has another added advantage as the Kindle app for Android (I have a Nexus One) and OS X (MacBook Pro) is free. Before I had a Kindle I had a couple of Kindle books I'd read on my phone when I was stuck in a long line or a waiting room. Ironically, one of these books is The Long Tail by Wired.com's editor-in-chief. I was sitting at the DMV when I read several paragraphs discussing the possibility of on-demand book production which would allow more diversity as it removes the large capital expense of printing hundreds or thousands of books on commercial printing presses - it wasn't economical to run one of these huge presses to print off a couple of copies. The holy grail of course was the "digital book" which would completely remove the costs of physical storage, printing and shipping. I will never forget reading those paragraphs on a phone at the DMV. As a child I had a set of encyclopedias as my best source of information - now I had any book I wanted. The digital book has arrived. It seems like such a given now but these paragraphs written just a few years ago highlight how far we've come.

Comfort


Before I received my Kindle I had often thought about buying one myself. One thing I thought I'd really miss was holding and flipping through an actual book. I don't. I prefer reading on the Kindle. The Kindle is easier to hold and "flip" pages. I have the 3rd generation device, previous versions were a bit bulkier. I do much less repositioning and adjustment of both my hands and what I'm reading. I still love "real" books but my Kindle books have become just as real and I find myself wishing I could somehow smash my physical books into the device.

Kindle-ish stuff


On the Kindle you can put a cursor in front of a word and a dictionary pulls up the meaning. Very cool. Most of the time this "cursor" is no where to be seen, it only comes up at your request. This feature has been very helpful. Need to search the web? No problem. The Kindle has a browser so you can check out Google.com or Wikipedia. Again, the Kindle is a reader so you won't be checking your Gmail but for simple searches this can be very handy. You can also do things like highlight sections and make your own notes. One way I often discover new authors is when they're mentioned by the author I'm currently reading - I can make a quick note of this so I don't forget. Every Amazon book with a Kindle edition is available in a matter of seconds. You can also check out samples of books you're thinking about buying. The battery life on the Kindle is crazy. E Ink doesn't require any power to hold it's shape - you only use power when you flip the page. This gives the device a battery life of like a month.

The dedicated reader isn't going anywhere. Amazon nailed it. Judging by their progress in 3 versions I imagine the Kindle will continue to improve. I can't imagine too many ways it could, but that's why we have Jeff Bezos and team. Thanks Amazon!

Cloud Computing = Business First Computing

Dad

I have always been obsessed with business and more specifically the management of business. This lifelong interest was instilled by my father. He is an accountant by trade and a businessman for life, holding various positions across the finance department and general management. Growing up I wanted to be like him, to think like him and to impress him. He would't care what profession I followed, just as long as I was happy (and didn't ask him for money) but all I ever wanted to be was a businessman too. I thought Ozzie Smith, Willie McGee, and Vince Coleman were pretty awesome and I played some mean shortstop and outfield back in the day; for a 10 year old anyway. But my goal was never to be a baseball player, I just thought if I played for the team then I'd have a much better chance at getting to manage a part of team business. I knew baseball was fun but I also knew managing a business was infinitely more important. Peter Drucker said it best:

The center of modern society, economy, and community is not technology. It is not information. It is not productivity. It is the managed institutions as the organ of society to produce results.

In short, the center of modern society is business. Personally I define business very broadly. Business is acting with purpose to create specific conditions and results. Commerce, education, charity, government, healthcare - basically what ever we try to accomplish as a group - as a modern society.

What does this have to do with Cloud Computing? One of the first concepts that popped in my head when I was studying the Cloud was "business first computing". Some estimates put the global cost of IT project failures at more than $6,000,000,000,000 (I'll save you the time ... that's TRILLIONS) every year. I've personally played a role in my fair share. Every technology professional knows that IT projects fail constantly for dozens of reasons. It's the only department that wastes resources so spectacularly and where such waste is tolerated. "Information technology is complex!" So is architecture but we don't have buildings falling down all around us. Unfair, I know, architecture has been around for thousands of years. Aviation is pretty complex ... many aspects of the modern economy are very complex. The IT industry is relatively young and complexity is a very real and very difficult challenge but $6 Trillion dollars complicated? No way. So what's the deal with information technology?

One big issue is business, business models to be specific. I wrote about this in late 2009:

On-premises vendors have been sitting pretty for some time. Imagine - you are able to sell a product over and over again yet it costs you next to nothing to duplicate, you're not responsible for getting the product to work yet make 90% profit margins on maintenance and support, you collect large upfront payments AND charge annual fees. This business model created our world's richest man. In this paradigm the vendor holds nearly all of the leverage. 

Cloud Computing upsets this balance of power.  

Cloud Computing is a service rather than a product. This is an important distinction. When a consumer purchases a product it is inferred they have done their due diligence - they may have buyers' remorse but at the end of the day the burden is theirs to bear. The vendor already has the cash in hand. Along with the software, the customer has also purchased hardware and other required products making them that much more invested - at this point, for better or worse, they either move forward or the decision makers look for other jobs. The burden of producing value is on the customer even though it was the vendor who received payment. Ultimately, a majority of IT projects fail, resulting in an enormous waste of precious capital. The system is prone to failure and on-premises vendors do not have an economic incentive to change the status quo.  

Providing IT as a Service changes the game completely. The economic interests of the vendor and customer are better aligned. The burden of producing value is on the vendor - where it should be as they're the firm being paid. This value must be proven on an on-going basis since the vendor must continuously prove themselves to the customer. The vendor becomes responsible for system performance, security, reliability, upgrades - ALL the work it takes to provide a transparent, high quality service. 

I had attended dozens of on-premises vendor meetings - real success had absolutely nothing to do with actual value delivered. Success was simply measured by the ability to effectively withdraw large capital payments from customers. Yes, everyone WANTS the customer to be successful and works hard to help the customer be successful but at the end of the day, the job was to sell a product. Leveraging that product to create value, well that's more complicated. The Cloud Computing vendor must continuously deliver measurable value to customers in order to be successful - they're providing a service. It was this fundamental change in business models that helped me realize Cloud Computing wasn't just some other option for the delivery of technology services to business - it was THE option. Technology plays a subordinate role to economics - like it or not, the Cloud is coming into every nook and cranny of every business across all applications.

Obviously, it's not a "flick of the switch" type change, different types of applications will move towards the Cloud model at their own pace as the technology matures. That being said, Cloud adoption is currently throttled much more by a lack of education than technical limitations. Take just 4 leading vendors as examples - is there anything you can't do with a combination of Google Apps, Salesforce.com, Workday, and Amazon Web Services? Sure, but your list is relatively short and it's shorter than you think it is, which brings me to my inspiration for this post, Salesforce.com.

It had been a few months since I had worked hands on with Salesforce.com or Force.com. In those months Salesforce.com had several major releases as well as awesome product enhancements, most notably Chatter. The user interface for users and administrators has had some great improvements. Integration with Google Apps, Batchbook, Linkedin, whatever - I can add an app from AppExchange in a matter of minutes. There's no need to upgrade to the next version, to buy new hardware to support Chatter, oh and everything works on an iPad and the iPad after that as well as the half dozen Android tablets coming in 2011. 

Sometimes I forget how incredibly awesome Cloud Computing is for business - you begin to take the fact that your applications continuously improve for granted. Salesforce.com is greatly improved in just a few months. SharePoint 2007 has had 4 years - how much has it improved? What's improved with SharePoint 2010 in that same period? Nothing. The online version of SharePoint 2010 isn't even available yet.

All the business ever wanted was the technology services. Buying and running products was the best way to provide these services. Operating a business at a loss for which there is only one customer? It's always been disgustingly expensive. Now it's just silly. Technology is just a means to an end, IT exists for the sole purpose of serving the business.

Cloud Computing isn't complicated - unless you're a traditional vendor

Businesses of all shapes, sizes and purpose are migrating by the millions to cloud computing solutions like Google Apps. Their reasons are not complicated - easy to use, full featured, reliable, flexible, empowering and inexpensive. 

One not need be technical to understand cloud computing. Google.com, Amazon, eBay, Google Maps, MapQuest, Craigslist, Facebook, Twitter, et cetera. Do you need to be technical to use Google.com to find the information you're looking for, Amazon to buy a 47 inch LG flatscreen, or Facebook to look at pictures of your sister's kids? Nope. Unlimited cloud computing resources are at your disposal 24x7.

Google Apps has more in common with Google.com than Exchange Server or SharePoint and this presents a problem for traditional software vendors. When selling software to businesses, complexity and pricing have a direct relationship. Basically the software vendor is incented to dream up and manufacture increasingly complex (or that which is perceived to be complex) "solutions" which customers then purchase - again and again. This has rendered software an extremely profitable industry - nearly a quarter of the world's 20 richest people are from Microsoft and Oracle. As with any large industry a self-perpetuating ecosystem has formed around the on-premise software giants - most commonly system integrators, independent software vendors, value added resellers, large account resellers, and training firms. Trillions of dollars spent and yet IT in the enterprise is years behind consumer technologies and millions of American small business owners are still handing out business cards with @aol.com email addresses - the current IT paradigm is working great for vendors but at the expense of customers.

On-premise vendors have been sitting pretty for some time. Imagine - you are able to sell a product over and over again yet it costs you next to nothing to duplicate, you're not responsible for getting the product to work yet make 90% profit margins on maintenance and support, you collect large upfront payments AND charge annual fees. This business model created our world's richest man. In this paradigm the vendor holds nearly all of the leverage. Cloud computing upsets this balance of power. 

Cloud computing is a service rather than a product. This is an important distinction. 

When a consumer purchases a product it is inferred they have done their due diligence - they may have buyers' remorse but at the end of the day the burden is theirs to bear. The vendor already has the cash in hand. Along with the software, the customer has also purchased hardware and other required products making them that much more invested - at this point, for better or worse, they either move forward or the decision makers look for other jobs. The burden of producing value is on the customer even though it was the vendor who received payment. Ultimately, a majority of IT projects fail, resulting in an enormous waste of precious capital. The system is prone to failure and on-premise vendors do not have an economic incentive to change the status quo. 

Providing IT as a Service changes the game completely. The economic interests of the vendor and customer are better aligned. The burden of producing value is on the vendor - where it should be as they're the firm being paid. This value must be proven on an on-going basis since the vendor must continuously prove themselves to the customer. The vendor becomes responsible for system performance, security, reliability, upgrades - ALL the work it takes to provide a transparent, high quality service. 

Detractors have a million different technical "concerns" about cloud computing but another million dollars on the bottom line will always speak louder. Cloud computing may not be for every vendor, but it is for every customer.