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Apps stores may succeed at the expense of SaaS

Apps stores may succeed at the expense of SaaS

New Zealand Computer Society CEO Paul Matthews says 2011 threatens to be another year of major change for the ICT sector in New Zealand and abroad, but not necessarily as expected. So, what does he think the year will really bring? Here are his top predictions for 2011.

Shift in distribution of software

As most will know, Apple recently released its new AppStore, bringing easy application browsing, purchase, licensing and updating to its desktop platform. The significance of this on the software sector has been largely overlooked, however.

Up until now, the step between developing a product and successfully marketing and distributing it has been large. In 2011 the AppStore and the equivalent Windows software marketplace (of which several big names such as Intel, Amazon and Microsoft are scrambling to put in place) will significantly change the way software is marketed and distributed, a change felt throughout the software sector.

And this will have some pretty major flow-ons. For instance, many haven't yet cottoned on to the fact that these distribution mechanisms are effectively in direct competition with SaaS. If they succeed, much of their success will be at the expense of SaaS-based software. On top of this, the whole pricing model for software will change in these markets, with developers "racing to the bottom" and chopping prices (in exchange for access to significant volume). This will create major challenges for the software sector.

Combining the ease of finding, purchasing, installing and updating software with an across-the-board re-calibration downwards of software pricing, it's inevitable that SaaS adoption will take a hit in 2011 as will more traditional software distribution channels.

Impact of WikiLeaks

The latest WikiLeaks "scandal" was a sometimes entertaining and sometimes chin-dropping event in 2010, however other than a healthy dose of 'red-face' dished out to various governments it has yet to produce a truly smoking gun. So what will the impact be in 2011 and beyond?

The more serious impact will not be so much a result of the leaks themselves, but rather the reaction and approach taken by governments in response. We've already seen the US Department of Justice issue sealed (ie secret) subpoenas against US companies such as Twitter demanding personal details of non-US citizens using the service outside US territories. This is a worrying development, however I suspect just the tip of the iceberg, especially if the US and others give in to the temptation to not exercise restraint after being embarrassed by this episode.

Reacting in such a way is pretty shortsighted, however, with implications far more serious than they may yet realise. Would you want to host your commercially sensitive data in a country with a habit of judicially forcing your host to hand it over to their Government without even telling you? The backlash from these types of tactics and other actions potentially taken to "tighten down" the Internet will certainly have impact, and this could well bring about a new set of challenges for ICT providers as consumers and businesses become more concerned about privacy and protection of their data.

Skills-based Approach

Back home, 2011 will be the year that companies, clients, and the public place even greater emphasis on professionalism in the delivery of ICT. Given that basically every other profession or vocation has a set of mandatory standards in place, adoption of New Zealand's ICT competency standard (ITCP) will become increasingly essential for credible senior professionals.

The concern, of course, is that if the ICT sector doesn't self-govern effectively the Government will most likely step in and do it instead, which would not be a good outcome for anyone.

Ultra-fast Broadband

UFB? Yawn. It's happening, we all know it, we love it, and it's essential for New Zealand. However that's just not going to change much in 2011. It's expected and accepted, so the Government's not going to get a whole lot of political oomph from UFB (unless they stuff it up), and no sane opposition is going to oppose it. There may well be staffing issues during rollout, and it will continue to gain headlines, but all and all there'll be no great changes here (other than possibly a bit of headline-catching but otherwise meaningless scrapping between providers).

Related to this, look for early signs of acquisition by Telecom buying market share, especially post-separation. I shouldn't mention names, and given it's no more than pure speculation I'll resist the urge to talk about the Big O... But you read it here first. Oops. I also suspect they'll find a willing seller in the current Government (and really, what's the Govt doing using taxpayer funds to run a commercially competitive ISP anyway?)

Government Procurement Policy

There's little doubt that Government Procurement policies will continue to be under the spotlight in 2011. The Government has a difficult job ahead -- cutting costs where possible, but in a way that doesn't destroy the local ICT sector as has happened elsewhere. Certainly one to watch.

And The Cloud?

I'm going out on a limb here stating that I really don't see accelerated movement towards the Cloud in my crystal ball (other than in obvious areas such as email), especially in the consumer and small business space.

People starting to think more about data protection issues, along with other things (like IRD raising concerns about business data hosted offshore), and performance concerns will inevitably result in a slowing of Cloud adoption. In the meantime SaaS providers will continue to move towards more hybrid solutions, providing a better -- and more reliable -- experience.

Don't get me wrong; Cloud is here to stay. However the march towards the Cloud will go from the mad scramble of the last year or so to a more orderly pace in 2011.

And the new buzz word for 2011? Appitize. As in, let's Appitize that software and make our fortune selling it for $1 a pop, like Chopper Dave. (Ok, I made that word up, but you never know...)

And that's my 2c.


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