Australian resellers beware - it won't be long before ISPs and telcos have you in their sights.
Much has been made of how electronic commerce will transform the channel landscape, but the consequences of electronic delivery have been largely neglected. By this I mean that instead of popping down to the local computer retailer, the customer will dial into the Internet and run the software remotely. On an enterprise front, instead of hosting applications in their own computing centre, users will have a permanent connection, either privately or publicly through the Internet, to an application service provider that they rent or lease applications from.
Electronic delivery of software is not a new concept, of course. Resellers should have started worrying about how the electronic delivery of software would affect their business as soon as you were able to download programs from the Internet.
However, it is only now that running software remotely as I've described is actually becoming feasible. On page 28 in this issue, we feature a story on ERP outsourcing and how vendors like Oracle are enabling application outsourcing or leasing. Already, IDC has defined the term Application Service Provider (ASP) for this type of distribution channel. Over the past couple of months, I've spoken to both Citrix founder Edward Iacobucci and Netscape CEO Jim Barksdale, who have both evangelised this style of computing.
I think they're on the money.
Right now ISPs and telcos are best positioned to take advantage of this movement. And they will take advantage, because like hardware and software resellers, their margins are being squeezed.
And so like hardware and software resellers, they are also looking to add value. The advantage ISPs and telcos have is they can bundle together both bandwidth and applications services for the customer.
Of course, where there is a threat there is also an opportunity. ISPs are of course just communications resellers. Many of you may already have a partnership arrangement with an ISP or you may have an ISP arm to your business. It makes sense.
The synergies between the two businesses are going to become increasingly apparent as the way we do business and the way we use computers moves increasingly online.
The great thing about this concept is it realises the long-held dream that computing should be like a utility. You plug in your client and have access to computing services like you do to the power telephone, or water (OK, if you're in Sydney, forget the water analogy). It represents an era where it doesn't make sense to do anything but outsource your computing functions.
Now that's an opportunity worth making a play for.