I've been thinking a little more about the issues of cannibalisation of revenue sources that cloud produces for traditional software vendors. I noted that Apple seem to be coping well with the way in which iPhone appears to be eating into the sales of iPod, but of course this is a classic example of an upsell… getting your customer to spend more on a product that (usually) offers enhanced features and benefits over the one that they intended to buy in the first place.
Moving customers from a traditional software licence model and deployment into a cloud service should (on price) be a significant downsell. That is much harder for a business to stomach… as the music industry can vouch for, and the book publishing industry seems to be struggling with. I'm thinking about going Kindle, but just can't do so when the electronic copy is usually as much if not more expensive than the paper version. VAT status plays a part in this, but from working in the publishing industry for a number of years, I know the huge costs involved in producing, storing, distributing, returning and ultimately pulping paper books.
Established software firms are going to struggle with downselling. But they will need to as new entrants into the market disrupt. What is going to be of particular interest, though, is how many of the new entrants sustain their new models… one thing of note when visiting Google this week is how many new joiners they have from the traditional software vendors. Will they bring their old ways with them to Google (and other Cloud vendors) under the guise of making cloud "truly fit" for the enterprise? I hope not…
mmitII 