Staying profitable in the face of cloud computing, SaaS

Service provider takeaway: VARs should put strategies in place now to remain viable when cloud computing and Software as a Service take hold.

The sardine canneries along Cannery Row in Monterey, Calif., were going strong in the early 20th century. Emboldened by an abundance of sardines, investors poured money into the industry; at one point, there were more than 10 canneries in operation. In the second World War, Monterey became the "Sardine Capital of the World," supplying most of the sardines sent out to troops. Business was fantastic.

However, in a very short period of time -- before the 1950s, in fact -- the industry disappeared almost overnight. There simply weren't enough sardines to catch. No one thought to look ahead and plan for the eventual decline of the sardine population in the area. Cannery management just assumed that there would be an ongoing supply of sardines. After years of overfishing, the sardines were gone, and there was nothing left to fish. And so a strong industry that had helped feed our soldiers became just a memory.

Today, those of us in the reseller business may be on the precipice of another such decline. There's increasing evidence that the business model of today's value-added reseller (VAR) will change in the not-too-distant future. Here are the signs:

• Announcements of faster wireless WAN products (High-Speed Packet Access and Evolved HSPA on AT&T's network) from wireless carriers.
• Inexpensive and very fast broadband offered by cable companies (20+ Mbps) and Verizon FiOS (up to 50 Mbps).
• The emergence of desktop and server virtualization, which introduce efficiencies that will reduce customers' hardware needs.
• Voice over IP and hosted VoIP solutions such as those from M5 Networks and Packet8, which could eat into on-premise PBX sales and support.
• The proliferation of Web 2.0 technologies such as social networks and collaboration apps.
• The ubiquity of Java and Ajax technologies, allowing Web browsers to become launching pads for rich Web applications.
• WiMax, which brings the potential of wireless broadband over a large area.
• Cheap file storage.
• Online productivity and collaboration applications like Zoho, Google Docs and Microsoft Office Live.
• Improvements in the security of Web browsers.
• The commercial success of hosted application providers such as Salesforce.com, Intuit, Appriver and Intermedia.net (Exchange hosting).

A VAR's universe ...