Mobile SaaS

When IBM tosses down 100,000,000 R&D dollars, we had all better pay attention. IBM has discovered mobile, no doubt dumbfounded by the runaway popularity of its media rival Apple. I am sure that Apple’s original 1984 poke at the then-failing IBM left a shoe print on IBM’s corporate butt. With IT hardware commoditizing and the market for IT services being finite and more competitive, it would be unsurprising if IBM was looking for where to grow next.

They may be as enamored by iPhones and Apple’s app store as a crazed public.

IBM has decided to invest $ 100M into mobile communications research over a five year period. Though Big Blue is focusing primarily on extending enterprise IT to handies, they are not immune to the notion of enabling B2C and C2C interaction as well. Apple has demonstrated that selling to the masses generates massive mullah.

Being an organization driven by numbers and other forms of common sense, IBM made note of two interesting datum. Foremost was that 83% of the humans roaming around the planet today do not have easy access to computers. However, these folks are being launched directly into the wireless age. IBM’s Institute for Business Value notes that mobile user headcounts will rise 191% before the end of 2011, before the next Congress has a chance to muck up the economy further than the current Congress appears ready to do.

At the end of that year a mere one billion homosapiens will be texting one another, and in the process disproving the million monkey theory once and for all.

Think about a billion customers. If you could earn a penny from each of them, you would pocket $ 10M bucks. Do that every day and you would churn enough money to make even Obama blink. This explains why executives from America’s mobile carriers vigorously defended their text messaging pricing before Congress. A billion monkeys may not text the complete works of Shakespeare, but they will generate a wad of cash large enough to impress King Lear … or even Bill Gates.

Which is where SaaS comes in.

IDC claims that SaaS (at least in Asian markets, many parts of which skipped the industrial revolution and landed squarely in the Internet age) will grow at six times the rate of packaged software. The report lists recurring obvious statements about the low start-up cost of SaaS apps and other unsurprising factors. What it doesn’t note is the union of SaaS, cloud computing and mobile.

This is where some major gold will be unearthed.

It is a given that mobile handsets are computers and unified communications systems. People’s lives are now influenced by what they can or cannot do with a handset. As IBM notes and green-clad Iranians proved this week “…mobile telephony holds the future of communication and exchange of information.”

Yet there must be a back-end for most mobile apps. A server somewhere intermediates the exchange of everything and serves-up applications to handsets. Since mobile apps are like the Internet of two decades ago – so new that nobody knows what might be profitable – a lot of experimentation needs to occur. Apple’s app store was Steve Job’s way of letting a million minds experiment and prove which iPhone applications people really wanted and needed, and do so without investing Steve’s own R&D dollars.

The Rubber Duck iPhone app comes to mind.

SaaS on public clouds will be the defacto approach to creating public (and perhaps private) mobile applications. Low cost and flexible scalability are necessary when introducing a new mobile application to a billion potential users. Vendors at the intersection of mobile and SaaS stand to profit handsomely. Anyone who can take the platform approach and dedicate it to mobile applications stands to earn the business of every soul searching for a way to profit from a billion mobile users.  This is not quite a new technology market definition, but it is unique enough to be very interesting.

Guy Smith is the chief consultant for Silicon Strategies Marketing. Guy brings a combination of technical, managerial and marketing experience to Silicon Strategies projects. Directly and as a consultant, Guy has worked with a variety of technology-producing organizations. A partial list of these technology firms include DeviceAnywhere (mobile applications), ORBiT Group (high-availability backup software), Telamon (wireless middleware), Wink Communications (interactive television), LogMeIn (remote desktop), FundNET (SaaS), DeviceAnywhere (mobile applications), Open-Xchange (groupware), VA Software (enterprise software), Virtual Iron (server virtualization), SUSE (Linux distributions and applications), BrainWave (application prototyping) and Novell.

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