Online Software's Potential Problems

John Dvorak had an interesting piece on software as a service (SaaS) - a rising trend in which software companies make software available as hosted services on Internet servers. You pay the fee (or, in the case of a company like Google, don't), and you can then use the software.

Dvorak's rant uses a big SaaS network failure that Microsoft recently had and then goes on to point out the following:

Though tech trends are clearly going in the direction of having apps online, last weekend's massive failure of an important online subsystem does prove that such reliance on the network and applications servers has the potential to be catastrophic. Microsoft is a provider of server software and is more than a little familiar with running huge installations. This 19-hour outage that the company itself said would last perhaps 72 hours happened to Microsoft, not to Alabama Joe's Server Farm and Toaster Repair. So that in itself is scary.

That is certainly true, but hardly inclusive. There are many other potential problems with SaaS:

• If you have that software on a laptop, what happens if you're traveling and can't get an Internet connection? Or if you have to pay additionally for one-day access as happens in many airports? Not only are you at the mercy of network outages, but you're at the mercy of always having that tether to the Internet.


• Your data - possibly sensitive - may be up on someone else's server. Sure, hackers are a ptoential problem. So is industrial espionage, or government subpoena. I'm no lawyer, but I bet that it could be much easier for someone to get information from a third party than directly, because the software host won't want to get in the middle.


• You lose control over what version of the software you're on. I know that keeping up to date is supposed to be one of the features of SaaS - you always have the latest version. But I've seen too many new software versions that turned out to be disasters. It used to be a rule that, at least with many vendors, you'd never upgrade on a new release. Instead, you'd wait some time and see how others fared. With software as a service, that no longer works.


• With SaaS, you keep paying. There's no such thing as owning a license and being able to use it freely. What if the company changes its rates? You end up paying them. If you're running a small business and cash is tight that month, it's another bill that you must pay, or risk losing access to your information.

And that last point is really, I think, the essence of Dvorak's article. Instead of using software as a tool, you are at the mercy of the company. If it goes out of business - as happened with services in the dot com explosion - then it's probably not going to give you advance notice and you may be stuck. If it changes its usage policies, you are stuck. If it has financial difficulties and service suffers, you are stuck. Of course, this entire trend isn't about better service for the user. It's about a sustainable fee structure for the software vendors, who eventually found that the early promise of sell a copy and then sell upgrades eventually putters out as a company reaches a natural saturation point in the market. When you hear a lot of enthusiam for this business model, it's vendors being focused on themselves, not on you, the user.

It's a Case of Out with the New, In with the Old at Microsoft

An article in Computerworld (though it comes via PC World) says that Microsoft will see increased Windows XP sales in 2008 than in 2007, even though Vista is available:

During a conference call with analysts following the earnings results release Thursday afternoon, Chief Financial Officer Chris Liddell said the company has changed its fiscal year 2008 forecast from an 85/15 split in sales between Vista and XP to a 78/22 split. Windows XP sales will, in other words, be nearly 50 percent higher in the next 12 months than Microsoft had estimated earlier.

Alright, so it's not that Vista is going away, or even that it's selling less than XP. But this really is an astounding situation for the company. It's continuing to set aside revenue into the "unearned income" category for the year because of "undelivered elements." That translates into having to ship unannounced upgrades and enhancements to Vista. Another way of saying that, I think, is that Vista has too many problems and gaps, which shouldn't surprise if you've followed stories about the product, or even know someone who has shifted to it.

Microsoft is planning to stop selling XP to resellers and retailers after the end of next January. What does this all say about Vista specifically, and the software business in general? The industry is on a painful tredmill. They sell products, which probably don't really need to be replaced for years, and then keep adding new features that few people ask for and create new file formats to make older versions obsolete. This is why Microsoft and other companies are trying to push software as a service - not because it's good for customers, but because they're trying to get themselves out of the pricing jam they've been in for a good 20 years and get people locked into a leasing model. There you know customers will be regularly paying money.