The Next Wave of Computing?
Fortune magazine has a fascinating article about a new line of “thin” computers from HP.
These are not computers in the traditional sense: they have no local storage (like a hard drive), instead having just an operating system and a browser - and not much else - “installed” in flash memory.
In a nutshell, HP has determined that the clear trend among larger businesses is towards software as a service (SaaS, sometimes called On-Demand), rather than software and data stored on local machines. Since everything is remote, what users really need is a web browser, memory, and a reasonably powerful processor.
The implications are huge. First, it’s a lot cheaper: the new line is priced at about half of what comparably-powerful traditional computers from HP cost ($450-$500 for desktops, $725 for a laptop). These are enterprise-class machines, too - not the cheap office supply store versions - so their components are top-notch.
Secondly, they’re vastly superior from a security perspective because there’s nothing stored locally. I know that many people are nervous about having data on a remote server, but having run one of the top network security companies I can tell you that’s a misplaced fear (see my posting Is your money in your mattress?) - data is much safer in a well-architected online environment than it can ever be on a local machine.
But most of all, it’s a window into the future. Companies like HP don’t introduce products on a whim, but only after careful thought and research. What this signals is that they see the market moving, and want to be at the forefront not just in terms of thought leadership but of sales.
As you plan for your company’s technology future, this is something you should be watching.
March 1st, 2008 at 9:04 pm
Hi Ridgely,
I fully agree that the combination of thin client systems and SaaS is the environment in which future applications will run.
You provide 2 major reasons why many applications are moving towards the SaaS model - lower support costs and security. Cost of managing complex applications (install, upgrades, security etc) is expanding faster than the available resources of major IT organizations, let alone SMBs.
However, I believe that there is an even bigger 3rd reason for moving towards SaaS, and thin clients - the power of groups. For example, using a SaaS product (like NetBooks), a group can be created to represent a set of customers sharing a common aspect of their business – for example all #2 yellow pencil buyers to all olive-oil manufacturers. Once customers opt into groups they benefit from capabilities like volume discounts for shared bulk purchases, sharing of best practices in similar product areas etc. Dynamic groups creation should be far easier using SaaS than distributed applications.
In short, SaaS + thin-clients can bring the power of groups to SMBs while completely securing their data and managing their applications in a cost effective way.
I enjoy reading your blogs, and believe that NetBooks is powerful idea whose time has come.
Prakash Siva
March 2nd, 2008 at 5:43 pm
Thin(ish) client computing is an excellent way to implement SaaS, but thin client computers that run embedded operating systems (like XP embedded) and lack a hard drive can be too complicated and limited for a small business running just a handful of computers.
Absent a hard drive and normal “add/remove programs” functionality, it can be shockingly difficult to do simple and unavoidable things like installing a printer (e.g., a receipt printer) or removing a disused program that is taking up precious RAM drive space.
By all means, get a stripped down, small form factor computer and lock down the non-administrative user permissions like a thin client would, but don’t give up the flexibility of a modest hard drive and easy configurability of mainstream operating systems. It only costs about $100 more, if that, and you will find that “staying on the path” a little will save a lot of headaches - unless of course you are an IT manager and have 50 computers to configure identically and have the tools and know-how to do that.
This might seem nit-picky, but one of the places where SaaS makes the most sense is in smaller enterprises that lack the ability to create and administer a comparably mobile, functionally rich and integrated system.
For such enterprises, SaaS can actually be a judo move that converts a scale disadvantage into a reverse economy of scale. Because they are small, they can’t efficiently implement IT best practices in-house; because they can’t do it themselves, they outsource; because they outsource IT, they focus their key resources (personnel, thinking and energy, etc.) on the things that make them better than the competition.
Also, once they have outsourced IT, it is easier for them to outsource more non-core functions (bookkeeping), expand geographically (using regional reps), and keep up with new IT best practices (not retaining credit card digits). As a result, because they are too small to do IT themselves at the beginning, they become positioned to have a perpetual advantage over enterprises who started with a custom integrated, in-house system.
To bring it back home, keep your in-house IT to the simple things most people can easily afford and understand, like a PC, and stay away from things give off the ozone smell of the IT dept.
March 3rd, 2008 at 3:38 pm
Other accounting software has come of age allowing remote groups via VPN logins and exports to accountants, cpa’s, and other need to know companies. They also have the years behind them in the market place.
Getting well established firms to migrate to Netbooks from their invested software and additional training might be a hard sell. Everyone knows about news reports of major corporations loosing sensitive data to thieves or ex employees. Everyone is used to guarding their sensitive data in-house.
Educating the masses about the latest in encrypted data transmission and remote storage should help in this regard as well as being free to those professionals.
Taking over supply chain management, payroll, accounting, POS, and ecommerce will be a very attractive offer for mid to large size companies but still out of the reach for small mom and pop and struggling entrepreneurs. Perhaps a lighter version more affordable to those individuals grossing less than 1000.00 a month.
Before leaving CRE Loaded, I remember taking the initial call from your company. I currently struggle to do freelance work. Perhaps in time, I too might be able to use your accounting software or be an evangelist for it.