TWIS#21- Apple v.s. the world- it’s gone mad! Salesforce IaaS?

TWIS#21- This Week in SaaS

Breaking news- Is Salesforce to enter the IaaS arena with VMware?

In this week’s TWIS:

• Apple v.s. the world madness (in case you missed it…) It is feeling like Orwell’s version of 1984, not Apples (inc. video)
• What to do about distribution channels for SaaS apps, lessons learnt from Apple, Twitter, Robert Scoble and Mark Suster
• Salesforce show’s chatter in action (and get’s buried under the Apple nonsense)
• Techcrunch beats up Microsoft’s cloud abilities
• Great post on why multi-tenancy matters by David Linthicum
• In other news- Google releases new version of Docs, Clouds working for Governments, Jeff Kaplan Helpstream post mortem, Joel York’s excellent SaaS finance series continues and Mikael launches SaaS customer support survey

TWIS#21

OK, OK, I’m now really sorry if you’re fed up with the coverage of the iPad in TWIS, but I think it’s really important to cover the major issues of the day, and analyse how it affects SaaS.

Ben Kepes opens the debate:

The blogosphere is aghast with the latest salvo fired in the Apple vs the world war – this time it came in the form of an update to its iPhone Developer Program License Agreement that specifically bans the use of third-party compilers for creating apps that will run on the iPhone OS. Basically it looks like Adobe’s plans to create a workaround for Flash on the iPhone and iPad may have been stymied.

What do you make of this 1984 Apple commercial- launching the Mac:

Ben continued:

Hmmmm – anyone else feeling a little uneasy that Apple have, in an Orwellian twist, seemingly returned us to the days of Big Brother? It seems that the public also feel this latest step is one too far if a Facebook fan club and a bunch of replies to various post is any indication – feel the passion evident here!

Anyway… back to the new terms and conditions. I was chatting about this with a friend who is involved with a company that makes a web application that utilizes Flash heavily. My comment to him was that it seems the writing is on the wall, what with the market share, and more importantly share of the hearts and minds, that Apple has, it seems that the war for Flash has been lost.

His perspective was a little different, taking the line that Adobe seems to be in all this by saying that it’s a big web out there and no one company will succeed if it attempts to lock down users to one particular way of doing things. He also went on to suggest that Apple developers where experiencing something of a Stockholm Syndrome – and developing an empathy for their oppressor that is beyond all reality. personally I see it a little different – given the ridiculously large number of iPads that Apple sold in the first weekend post release, Apple developers realize that life under a dictator might not be pleasant, but if that dictator brings along with him potential revenue, sometimes what is “right” needs to be left to the side.

Ouch! Stockholm syndrome… But the bigger point here is about openness and walled gardens. Some history via Robert Scoble:

Fact: In 1994 I thought Apple was going to own it all. By 1999 most magazines thought it was dead.
Fact: In 1992 Pointcast shipped. By 1999 it was dead.
Fact: In 1994 Microsoft was beta testing a system called “Blackbird.” They killed it before shipping it. It was designed to compete with Pointcast and AOL, both walled garden approaches….

What did Pointcast in (content publisher greed) isn’t what did Apple in, though. No, that was all about the closed arrogant system that Apple had built. It turned off developers by the droves.

Not that Apple was all that wrong. They were trying to protect users from ugly apps. They saw the Macintosh as “art” while Bill Gates had no such delusions. Bill told developers “build” and even gave them a tool that looked like a modern Hypercard: Visual Basic. Apple in the meantime killed Hypercard because it enabled normal people to build really ugly and wacky apps.

What did Steve Jobs do yesterday? Told the normal people “you will NOT build apps on my beautiful machine.”

Robert continues:

So, what does Apple need? Is it more apps? No way. At 130,000 apps Apple already has enough apps to keep a sizeable lead for years over its competitors like Google’s Android OS.

No, what Apple needs is better quality apps. So, does Apple care about templated apps or ones developed in Flash or some other cross-device language/system? No way.

In fact, if anything, Apple does NOT want developers to develop apps for other hardware at all, or if it must, it wants the apps on other platforms to suck and suck visibly. Just like today. Tweetie (which was just purchased by Twitter, more on that in a second) is a LOT better than Seesmic or Twitroid on Android. Steve Jobs LOVES when that happens because it keeps you locked into the iPhone and iPad.

So, how does Steve Jobs make sure that the best developers work on iPhone and don’t work on building systems that make it easy to port apps from iPhone to Android or Microsoft’s new Windows Mobile 7, or to Nokia or to RIM’s Blackberry (which is VERY hard to develop for)?

Well, easy, make it against the rules!

This pisses everyone off, because they thought that they would be able to hire one development team to build for all platforms, but now they’ll have to build two development teams: one for the iPhone and one for everything else.

So what this whole argument is about is about is dominance- Steve Jobs doesn’t trust the developers to develop great apps for his platform without his influence (and approval). Yet history has shown in the long term, companies struggle to consistently innovate and eventually die, or become laggards, just like Apple did. Companies that embrace openness and innovation consistently lead, like Google.

How long will we put up with the walled garden? I dunno, but Techcrunch doesn’t think Steve will be able to re-write history, twice.

The other big tech news of the week was Twitter’s acquisition of  Tweetie- again via Robert:

So now Twitter is showing its own version of causing trouble with developers in order to move to the next level. What did Twitter do? In the past few days they’ve released a Blackberry client and bought iPhone developer Tweetie and said they intend to rerelease Tweetie for free under the Twitter brand.

This was like a bomb going off in the Twitter developer community as developers like Seesmic and Tweetdeck realized they had a new competitor: Twitter itself. How unplatform like!

So now the Platform is competing with it’s ecosystem.

This is a major consideration when choosing if you use a platform as a distribution method for your SaaS business- it could be Google Apps Marketplace or Salesforce AppExchange. What to do? Mark Suster explains:

I articulated in a previous post that startups should not treat the iPhone as a business but rather as a channel.  The same is true of Twitter, and as a VC I would personally never fund a company that looked to simply plug a functional gap in Twitter.

So Platforms are channels- not an end game in themselves…

Despite Benioff’s best PR efforts this week, his noise was duly drowned, as was everyone elses… (remember Jo Moore? A good day to bury bad news) Maybe that’s what twitter was trying? Anyway, he was on the road promoting chatter:

As you’d expect, Salesforce CEO Marc Benioff is a constant salesman. At a dinner last night in New York City, he kept showing everybody in the room his newest baby, Salesforce Chatter, which turns Salesforce into feeds of people and customer data. He was showing it on his iPhone, which he wields as a sales weapon. (Benioff cornered one poor CIO with his iPhone demo for a good 20 minutes).

I got Benioff to show me the iPhone app on video (above). It is a supercharged, Chatterized version of Salesforce’s iPhone app which is not yet generally available. But you can see how it is very Facebook-like in that you follow a stream of updates from people you work with. Each one has a profile. But companies and customers also have their own feeds and profiles. Anyone who uses a Twitter app on an iPhone or Facebook or Yammer will find this user-interface familiar.

Benioff might be a big believer in the iPad as a new window onto the cloud, but it is the iPhone that he can whip out every time he meets a customer that is going to help him sell Chatter. At the beginning of the video, Benioff also mentions the news announced earlier today that Chatter will get its own marketplace of apps.

Breaking news out this evening is it looks like Salesforce is going into the IaaS business with VMware- check out http://www.vmforce.com/. They’ll have the entire SPI stack covered soon, SaaS, PaaS and IaaS.

Techcrunch was particularly hard on Microsoft this week:

Microsoft is still fumbling as it tries to navigate its way out of the innovator’s dilemma. The business was built and nurtured on its lucrative suite of Office products— unfortunately, that reliance on Office is now complicating its full migration to cloud computing. Today, we spoke to Senior Vice President Chris Capossela, who acknowledged the challenge of growing profits without pay-to-install software.

In our video interview, Capossela eventually goes on mention that there will be paid services on cloud computing, although he did not articulate which services are expected to be the biggest revenue drivers. However, the fact that Capossela heavily (and immediately) highlighted the old pay-to-install Office model, underscores Microsoft’s ongoing dependence on the old cash cow and perhaps, excess optimism. Last month, Steve Ballmer said, “when it comes to cloud, we’re all in.” The company’s head may be in the cloud but one foot is on installed software.

Have they forgotten they’ve got $9.5bn to spend on R&D?

Remember their profit chart?

Not much coming from online services- i.e. Cloud…

A couple of weeks ago a reader asked me to cover more about multi-tenancy. This post gets directly to the heart of the issue I had to reproduce it here in full:

Alok Misra hits on good issues around the dispute, or should I say silly dispute, about multitenancy: “There’s a debate in the software industry over whether multitenancy is a prerequisite for cloud computing. ”

Let’s get this straight right now. Cloud computing is about sharing resources, and you can’t share resources without multitenancy. Even if you have virtualization, I don’t consider that alone to be cloud computing. Some multitenancy has to exist within the architecture, allowing resources to be apportioned efficiently. That point of view strikes me and to most of those in the cloud computing space as logical, but it seems to be lost on those attempting quick migrations to “the cloud,” without having to put in the work.

Alok agrees: “I sit firmly in the multitenancy camp. A multitenant architecture is when customers share an app in the cloud, while a single-tenant cloud app is similar, if not identical, to the old hosted model. But compare two subscription-based cloud apps side by side — with the only difference being that one is multitenant and the other is single-tenant — and the multitenant option will lower a customer’s costs and offer significantly more value over time.”

Why is there even a debate? The traditional on-premise vendors, as Alok points out, are moving to the cloud. These vendors are finding that building multitenant architectures is a much bigger nut to crack than they thought. Indeed, I’ve built three of those architectures in my career, and I can confirm that they are not at all simple to design, build, and operate.

Therefore, those moving from single-tenant on-premise architectures to multitenant cloud computing services are going to find that the transition is years in the making, not months. This is especially the case if you have to remain backward-compatible with your existing customer base.

Thus, the quick fix is going with easy-to-deploy single-tenant architectures that soon run out of resources as they scale (because few items are shared). This is a way to jump into an emerging market, but without taking the time to design and build the required technology, it won’t serve the market for any length of time.

There should be no debate here: Cloud computing, both private and public, requires the concept of multitenancy. The traditional providers are welcome in the cloud as long as they can provide multitenancy. If you can’t do it, then don’t try to argue that it’s not needed.

Get to work!

(Emphasis- Ed.)

Can we put that one to bed now?

In Other news:

• Google launches re-write of Docs- realtime collaboration. Offline going as Gears is sunset but coming back with HTML5. Wave where are you or should we wave goodbye?
• New report shows cloud can definitely save governments money- between 25 and 50%. Are we surprised? CIO Kundera thinks fed data centres are only 7% utilised.
• This is not turning into an Apple Blog- but they’ve sold 450,000 iPads and 50m iPhones to date.
• Jeff Kaplan’s post mortem on Helpstream (from Google cache).
• Joel York’s excellent SaaS finance coverage continues- this week how to value SaaS companies. Customer Lifetime Value is the key proponent
• Mikael is researching SaaS support- take the survey now!

Have a great week!

Justin

jp@justinpirie.com