Pirates & re-sellers: Will they meet at world’s end?
By Paul Mignone
Unless you’ve been living, working or conducting research under a rock in recent years, chances are that cloud computing has affected your life in some way. From consumer mobile phone apps, to the massive roll out of corporate (e.g., Telstra) and research (e.g., NeCTAR) services, more and more consumers and organisations are looking to the cloud for cost and time efficiencies. It is therefore no surprise, that the cloud technology has not only been disruptive to organisational processes, but also to traditional software and hardware business models.
A recent conversation article by Associate Professor David Glance (University of Western Australia) discussed how cloud computing platforms like Amazon Web Services are challenging companies such as IBM, HP and Dell, who have made their money traditionally from selling physical computing hardware to customers. Companies such as VMWare provide virtualisation technologies that have facilitated the rise of cloud computing. However this also represents a ‘double-edged sword’ for such companies as they also profit from having their software installed on physical machines.
It’s therefore no surprise that these challenges would eventually trickle down to software re-sellers and their distributors. Software as a service (known as Saas) is a software delivery method in which software and associated data are centrally hosted on the cloud. Using Saas, companies can pay a subscription fee to use the software, while its associated data can also be stored by the Saas provider. The Saas business model is also viewed as a way to potentially eliminate software piracy.
A global study conducted by the Business Software Alliance (BSA) in 2011 placed the commercial value of software theft to $63.4 billion, with over half of the world’s computer users (57%) admitting they used pirated software. It could be that the best solution to software piracy is for the software companies to never release (or sell) their software to client, but rather lease it to their clients and host it on their own cloud infrastructure. Methods such as Saas may still be open to piracy in the form of shared login credentials or ‘Dark clouds’ (i.e. cloud servers that deploy pirated SaaS), however Saas is still regarded as method to greatly reduce it.
The Saas model will also present challenges at the reseller level, since many of these subscription-based programs severely undercut the cost and difficulty of server-based programs. With Saas, businesses can use an array of software solutions in the cloud for hundreds of dollars a month instead tens (or even hundreds) of thousands of dollars when buying from resellers. Software distribution is also immediate, and there are fewer complexities involved with software trails (e.g., most software come with at least 30-days) giving greater potential for direct sales.
However, there are some legitimate concerns with cloud software that resellers are quick to exploit. Cloud security is a persistent one, yet every day, more and more solutions at both the hardware (e.g., Cisco) and software (e.g., VMWare) levels are seeing these concerns slowly abate. Graphics rendering in the cloud is traditionally seen as a limitation for cloud adoption of Computer Aided Engineering (CAE) programs, as real-time graphics rendering in the cloud can suffer due to performance and latency issues. These issues are also being resolved at the hardware level with Nvidia releasing their GRID graphics card. The technology can offload the processing of graphics-intensive CAE programs from the CPU to the GPU in virtualized cloud environments.
What is clear is that times are changing. As more individuals and organisation adopt the Saas model, software resellers will need to focus less selling software, and more on providing value-added services to cloud products (e.g., training and implementation of cloud products into businesses). Otherwise software vendors and pirates may become the strangest of bedfellows, struggling to survive against the increasingly unfavourable odds that the cloud brings.
