Rod posted about the economics of software companies. The basis of his post was some information out of Microsoft that told of the 180 person Mac business unit that generates $350mill per annum.

Rod pointed out that this is a significant return by anyone’s standards but that the 2-3 year release cycle is just too long – especially when compared to the likes of Zoho and other on-demand application providers who are releasing significant updates across their line up of products on a month by month basis.

Rod comments that;

Zoho seems to be in front technically, speeding past Google. The experience the web guys are gaining in collaborative editing will be invaluable. But I wish they would work on fat client versions as well.  They seem reluctant to charge. Hard to find any pricing info on Zoho. I think they should charge so they can accelerate investment.

These numbers show it is a high value space. New entrants getting close to the sacred cow will hopefully drive faster innovation in Office.

I’m not sure I entirely agree with Rod’s fat client comment, Kai-Fu lee, Google’s VP of engineering, and President of Google China, gave a presentation at the WWW2008 conference. He was specifically talking about cloud computing but one quote got my attention;

There are 600 million cellphone users in China, three billion worldwide, dwarfing the number of PCs that are Internet-accessible.

If you’re of the school that believe that the future is mobile, then any client-side component that limits the types of devices that’ll run it is sub-optimal. I guess it’s a question of balancing speed with ubiquitous accessibility (from a device perspective).

This ties into a discussion about what SaaS is really good for – which is aggregation. There were some comments in reply to Rod’s post some saying there is heaps of functionality in the incumbent solutions that we don’t use, some saying that the Google offerings don’t have enough functionality. Basically we’re seeing the fact that users requirements are all different. If we give up thinking about applications as one single stand alone offering and start thinking about them as different modules, we’re getting close to where we should be.

In the same way that Xero doesn’t do project management, but seamlessly integrates with an app that does, so to should we be thinking about office productivity apps along these lines. Agree on some standards that work across platforms (ie Office to OpenOffice to Zoho to Google) and then open them up. Allow those with an idea to take raw data and do different things with it

It’s another way to resolve the monetisation conundrum for on-demand office productivity apps – at the moment these offerings are massive one hit wonders – lets think of them as discrete components which we can pick and choose (and pay for) at will. If Joe software geek want to create a little app to automatically translate Powerpoint shows into Swahili, and someone want to pay him to use the app – then data portability should be no barrier.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

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