SaaS data loss: The problem you didn’t know you had

Open ... and Shut In a Windows world we bought the product. In Google's world we are the product. Judging from market share trends, we apparently don't mind being bought and sold. At least, so long as the price is right.

Yes, Apple gets all the news (and profits), but it's Google Android that is set to displace Microsoft Windows by 2016, according to Gartner. So much of the media's focus is on the battle between Android and Apple's iOS for the heart and soul of the mobile industry that we forget the meta-battle between both iOS and Android against yesterday's desktop market, still owned by Windows.

Given Microsoft's continued reliance on an outdated, licence-based revenue model, Microsoft may have an uphill battle winning in mobile.

Consider its competition, as Linux Foundation executive director Jim Zemlin does:

For many years, I've been predicting that hardware will soon be free, subsidized by service providers who use open source software to build low cost devices optimized for their services. Amazon, for instance, is reported to lose money on every Kindle Fire sold. And at $250 for a decently powered laptop, I can't imagine there is much profit in the Chromebook either. The profit comes in the services you purchase or experience while using the device. As the senior vice president of Chrome at Google says in the New York Times:

"Above all, it brings all of Google services, built straight into the device."

In Google Land, in other words, the hardware and software is going to be cheap and free, respectively, with money being made through advertising or other services, largely invisible to the cost-conscious consumer. Yes, there are premium buyers happy to pay for Apple or Microsoft devices, but the majority of the market is heavily trending toward "cheap and free."

And when that happens, Microsoft (and, eventually, Apple) can kiss goodbye to the developer ecosystem critical to winning over users. Developers go where the volume is, and that volume is Google's to lose.

Microsoft could pull an Apple and sell a consolidated device like the Surface. I mean, really pull an Apple and dump its hardware partners. In Apple's world, there is no distinction between iOS and the iPhone or iPad. You buy them together or not at all. Microsoft is flirting with this strategy for Surface, but it's unclear whether it will have the stomach to continue. Working with partners is perhaps too deeply ingrained in its DNA.

It might not be enough, anyway. Apple is happy to occupy the premium segment of the market, even as Google's Android takes the mass-market lower-end. Where does this leave Microsoft? It's unlikely to be able to beat Apple at the top and its strategy ensures it has no chance of beating Android at the bottom. Even suing Android into oblivion (or fat patent royalty fees, which raise the cost of Android for users), is unlikely to succeed.

Apple has been setting the terms for competing in the new world of mobile for years. But the mantle of market leadership is shifting to Android, and the rules are very different in a Google-dominated world.

Fortunately, Microsoft has plenty of experience playing Google's online game, what with Bing and Hotmail and its other online services, coupled with associated online advertising. Unfortunately, Microsoft still doesn't know how to pay for these services effectively, bleeding $2.5bn from its Online Services Division last year.

Can Microsoft turn this ship around? Of course. Google's dominance is not set in stone, any more than Apple's was. But there's a lot of hard, painful work for Microsoft to do in a Google-dominated world, much of it Microsoft un-learning most everything that made it successful.

That's a big, big ask. ®

Matt Asay is vice president of corporate strategy at 10gen, the MongoDB company. Previously he was SVP of business development at Nodeable, which was acquired in October 2012. He was formerly SVP of biz dev at HTML5 start-up Strobe (now part of Facebook) and chief operating officer of Ubuntu commercial operation Canonical. With more than a decade spent in open source, Asay served as Alfresco's general manager for the Americas and vice president of business development, and he helped put Novell on its open source track. Asay is an emeritus board member of the Open Source Initiative (OSI). His column, Open...and Shut, appears three times a week on The Register. You can follow him on Twitter @mjasay.

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