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Nicholas Carr’s Rough Type: BusinessWeek’s Sarah Lacy Gets SaaS

In today’s Rough Type, Nicholas Carr comments about Sarah Lacy’s latest Businessweek article on SaaS. Turns out, as we see from Microsoft’s inability to turn a profit in this area, the frenzy of SaaS activity may be lemmings to the sea. Here’s an excerpt:
Anyone who thinks the software-as-a-service business is a gold mine for vendors is wrong. The economics are fundamentally different from those of the traditional software business – and not in a good way.
As Lacy writes, the Web is “just as good at displacing revenue as it is in generating sources of it. Just ask the music industry or, ahem, print media. Think Robin Hood, taking riches from the elite and distributing them to everyone else, including the customers who get to keep more of their money and the upstarts that can more easily build competing alternatives.”
Web apps remain a hard sell when it comes to big, conservative enterprises, and the capital and marketing costs are daunting, particularly if you’re running your own data centers. This revolution in business software will play out slowly and, for most suppliers, painfully.
Read the whole piece here.

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