By SCOTT DEWING
Published: November 2007

TRADITIONAL DESKTOP SOFTWARE IS DYING and I can’t wait for it to be completely gone and turned into a distant memory like the 5 ¼” floppy disk. No more installation CDs and 20-character product keys for “activation”. No more software piracy. No more software updates, and—best of all—no more dreaded upgrades. Seriously, do we really need a new version of Microsoft Office as badly as Microsoft’s shareholders do? Probably not.

One day we’ll likely look back upon this era of desktop software with the same disdain as we do the DOS operating system. (My apologies to the two or three people out there who revel in the glory days of the command line prompt and those 5 ¼” floppy disks.) Soon we’ll access our software via the Internet. Rather than installing, we’ll log on and launch. Software will no longer be a product that you buy and install. It’ll be a service that you use online.

This isn’t a new concept. “Software as a service,” or SaaS, has been around for several years now. Under the SaaS model, software vendors develop web-based software applications that customers access via the Internet. According to Gartner, a technology research and advisory company, worldwide revenue for SaaS will hit $5.1 billion this year, which will be a one year gain of 21 percent. Furthermore, Gartner predicts that by 2011, one-fourth of all new business software will be delivered as a web-based service.

Earlier this year, Internet heavyweight, Google, entered the SaaS playing field with Google Apps, a web-based office software suite that includes word processing, spreadsheet, presentation, email, calendar and web-authoring applications. In other words, Google Apps offers the many of the same basic applications you get with Microsoft Office—but at a fraction of the cost. Microsoft Office retails at $400. Google Apps is free unless you want to spend $50/year for the “Premier Edition”, which includes a control panel for managing domain and user accounts and the ability to integrate 3rd party applications. Goggle is also offering the equivalent of its Premier Edition for free to schools and registered non-profit organizations.

As a lone end-user, you can get most all of Google Apps for free. In fact, I’m writing this month’s column using Google Apps’ word processing application. When I’m finished, I’ll publish the document so that my editor can access and read it online. In terms of features, Google’s online word processing application pales in comparison to Microsoft Word. But I’m a fairly simple guy who doesn’t need a lot of features. Even the 12 fonts that are offered by Google’s word processing application is overkill for me. I’m more of a one-font kind of guy. If I wanted too, I could create a spreadsheet or a presentation using Google’s applications. Again, these online software applications do not have nearly as many bells and whistles as Microsoft Excel and PowerPoint, but they get the job done for creating basic documents.

The best—and worst—of Google’s service offering is that it’s all online. Having it online makes it the best because I can access my documents from any Internet-connected computer in the world. The problem is that these web-based applications are useless when I’m not connected to the Internet. On an airplane, for example. This isn’t much of a problem for me because I don’t travel much and when I do I tend to be on vacation and don’t want to be taking my work with me anyway. This is an obvious problem, however, for corporate folks who spend a lot of their time working on the go. But limited connectivity while on-the-go is only a temporary problem. One day, the concept of being “offline” will be as distant a memory as those 5 ¼” floppy disks and we’ll wonder how we ever survived this era of not being constantly connected to the Net.

Google Apps and the emerging SaaS market is a threat to Microsoft’s dominance in the desktop software market. Microsoft doesn’t like competition and, based on its track record, tends to either buy or crush its competitors, choosing whichever tactic is in the best interest of its shareholders. But with a net income of $3 billion this past year, a skyrocketing stock value, and it’s powerful position in the Internet economy, Google has become too expensive to be bought out and too big to be crushed.

Microsoft has been left with no choice but to compete, which it’s been doing. Well, sort of anyway. Microsoft recently rolled out the beta version of Microsoft Office Live Workspace, which allows users to store and access “up to 1000+ Microsoft Office documents…from almost any computer with a Web browser,” according to Microsoft’s Office Live website. Like Google Apps, Microsoft’s Office Live Workspace service is free.

However, unlike Google Apps, it doesn’t enable users to actually create those documents using online applications. In other words, Microsoft Office Live Workspace is not a true SaaS offering like Google Apps. You still need to purchase Microsoft Office. This shouldn’t come as a big surprise to anyone. Microsoft has a lot (of revenue) to lose if it stopped churning out and selling new versions of Microsoft Office.

Microsoft has a lot more to lose though if it doesn’t create and effectively market a true SaaS offering for Microsoft Office. When it comes to technology, a paradigm shift is always occurring as new technologies are created and customer demands and expectations change to create new market opportunities. Technology companies that hold on to old paradigms in the midst of a paradigm shift are destined to get into trouble. Bill Gates perhaps knows this better than anyone who has survived and thrived in the shark tank of the commercial software industry. Microsoft itself was born amidst a paradigm shift and emerged as one of the wealthiest and most influential technology companies of the 20th century. If you had said back in the early 1980s that Microsoft would one day be a bigger player than IBM, you would have been ridiculed and laughed out of the room.

Many a tech pundit has decreed the death of Microsoft over the years every time a new challenger came onto the scene to potentially threaten Microsoft’s hegemony and strong market position. Whether that’s the case with the emergence of Google is doubtful. But there’s one thing I’m certain of: the death of desktop software is underway and the paradigm shift to SaaS is imminent.