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TECH TALK: Tech Trends: Utility Computing

July 1st, 2004 · No Comments

Server-based Computing

Server-centric computing is the second mechanism to lower the total cost of ownership. By moving processing and storage to a centralised computing platform, it becomes possible to reduce the investment necessary on the client computers and reduce the administration costs since only the servers need to be managed. Despite the benefits, thin clients have not become the norm. They make up only 1% of the worldwide computer sales. Is the picture likely to change in the future?

In developed markets, the issue is manageability rather than affordability. This is where thin clients can shine. The current generation of thin clients provide the performance of thick desktops without the attendant problems in terms of administration of the desktops. The next two years will see more than 200 million desktops being upgraded in the developed markets. This is an excellent opportunity for thin clients to be deployed in enterprises.

In emerging markets, thin clients can open up new markets. Unlike the developed markets all employees already have computers on their desktops, the computer penetration in emerging markets is very low. This is where thin clients combined with server-centric computing can provide an opportunity for todays non-users to be equipped with computers. This is when organisations can start thinking of automating their business processes.

Software-as-a-Service

Look at some of the most successful Internet companies: Yahoo, Google, eBay and Amazon. One of the attributes common to all of them is their use of a scalable technology platform which has given them immense leverage. In the area of business applications, companies like Salesforce and NetSuite are aiming to do the same. They are building out applications on the server which businesses can use through a web browser. In addition, they are also fundamentally changing the software pricing model from a large upfront charge with annual maintenance fees to one which is subscription-oriented monthly fees. From the financial point of view of an enterprise, this reduces the entry barrier to deploying software applications.

ASPNews wrote recently about the new crop of application service providers (ASPs) and the benefits they offer organisations:

These companies have had several years now to develop their products to match — and often exceed — the functionality found in traditional client-server applications. They have built up their customer bases steadily, so that now the true rewards of a subscription-based model can be reaped.

They have also used the unique attributes of the model to their advantage, creating applications that are highly customizable, quickly and seamlessly upgradeable, and quickly implementable. New features that take a year to get into the development cycle of packaged software can be deployed in an ASP product in a matter of months.

The result is that there is now a core group of service providers who have proven their long-term stability, who have a mature product, and who can deliver features that the traditional vendors cannot, and they can do it for less.

In fact, the nature of the subscription-based model makes it more customer-friendly than an installed software model. Once a traditional software vendor sells the product and cashes its large up-front check, it has a minimal incentive to satisfy that customer. There are ongoing maintenance revenues to consider, but the big payoff has already come and gone, and the software company has moved on to new targets.

Sun too has now got into the game with its President Jonathan Schwartz making a statement recently that hardware will be free. While I do not see that happening, it is possible that hardware will be subsidised in enterprises much like handsets and gaming consoles. What is likely to happen is that the entire solution (hardware and software included) is likely to become available on subscription-basis for monthly fees.

Tomorrow: India Action: Computing as a Utility


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