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Mobile SaaS

An interesting and profitable market is growing at the intersection of SaaS and mobile computing.

When IBM tosses down 100,000,000 R&D dollars, we had all better pay attention.

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IBM
has discovered mobile, no doubt dumfounded by the runaway popularity of
its media rival Apple. I am sure that Apple’s original 1984 poke at the
then-failing IBM left a shoeprint on IBM’s corporate butt. With IT
hardware commoditizing and the market for IT services being finite and
more competative, it would be unsurprising if IBM was looking for where
to grow next.

They may be as enamored by iPhones and Apple’s app store as a crazed public.

IBM
has decided to invest $100M into mobile communications research over a
five year period. Though Big Blue is focusing primarily on extending
enterprise IT to handies, they are not imune to the notion of enabling
B2C and C2C interaction as well. Apple has demonstrated that selling to
the masses generates massive muhla.

Being an organization driven
by numbers and other forms of common sence, IBM made note of two
interesting datum. Foremost was that 83% of the humans roaming around
the planet today do not have easy access to computers. However, these
folks are being launched directly into the wireless age. IBM’s
Institute for Business Value notes that mobile user headcounts will
rise 191% before the end of 2011, before the next Congress has a chance
to muck up the economy further than the current Congress appears ready
to do.

At the end of that year a mere one billion homo sapiens
will be texting one another, and in the process disproving the million
monkey theory once and for all.

Think about a billion customers.
If you could earn a penny from each of them, you would pocket $10M
bucks. Do that every day and you would churn enough money to make even
Obama blink. This explains why executives from America’s mobile
carriers vigorously defended their text messaging pricing before
Congress. A billion monekys may not text the complete works of
Shakspear, but they will generate a wad of cash large enough to impress
King Lear … or even Bill Gates.

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Which is where SaaS comes in.

IDC claims that SaaS
(at least in Asian markets, many parts of which skipped the industrial
revolution and landed squarely in the Internet age) will grow at six
times the rate of packaged software. The report lists recurring obvious
statements about the low start-up cost of SaaS apps and other
unsurprising factors. What it doesn’t note is the union of SaaS, cloud
computing and mobile.

This is where some major gold will be unearthed.

It
is a given that mobile handsets are computers and unified
communications systems. People’s lives are now influenced by what they
can or cannot do with a handset. As IBM notes and green-clad Iranians
proved this week “…mobile telephony holds the future of communication
and exchange of information.”

Yet there must be a back-end for
most mobile apps. A server somewhere intermediates the exchange of
everything and serves-up applications to handsets. Since mobile apps
are like the Internet of two decades ago – so new that nobody knows
what might be profitable – a lot of experimentation needs to occur.
Apple’s app store was Steve Job’s way of letting a million minds
experiment and prove which iPhone applications people really wanted and
needed, and do so without investing Steve’s own R&D dollars.

The Rubber Duck iPhone app comes to mind.

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SaaS
on public clouds will be the defacto approach to creating public (and
perhaps private) mobile applications. Low cost and flexibile
scalability are necessary when introducing a new mobile application to
a billion potential users. Vendors at the intersection of mobile and
SaaS stand to profit handsomely. Anyone who can take the Force.com
platform approach and dedicate it to mobile applications stands to earn
the business of every soul searching for a way to profit from a billion
mobile users.  This is not quite a new technology market definition, but it is unique enough to be very interesting.

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