It is all about Productivity

Mike Gunderloy at WebWorkerDaily has a great post on continuous innovation in online office suites. Both Google & Zoho are moving at a rapid clip. The root cause of this faster pace of innovation? Software development productivity.

We have experience in both the traditional and cloud model of software delivery, so can say with confidence that the cloud computing model enables a quantum leap in software development productivity. Such productivity gains for producers translates into faster innovation and better quality. And as I argued in my previous post, the reduced friction of lower switching costs in the cloud computing model will work to reduce prices as well.

Projecting this productivity advantage forward, I am confident in predicting that within a year or two, online suites will overtake desktop software in terms of features and functions. It won't just be the Zoho or Google suites that would get there, perhaps even new companies that are as yet unknown (I am assuming Microsoft already has its cloud service coming out!). Conventional wisdom holds that online suites will forever be a lightweight alternative, but I believe that will be turned on its head.

Where do these productivity gains come from? I will address that in a separate post - there are numerous disparate sources that aggregate into a vast gain.

This is great news for consumers, even for the ones that don't switch to the cloud, simply because of the pricing pressure it will bring. Like the open source competition which preceded and even enabled the cloud computing revolution, this competitive dynamic is fundamentally different from the one that Microsoft has faced before.