Software’s Future: Melding the Web and the Desktop

It’s been a busy few weeks for the big technology companies. On October 1, Adobe Systems announced an agreement to buy Virtual Ubiquity, a company that has created a web-based word processor built on Adobe’s next generation software development platform. One day earlier, Microsoft outlined its plans for Microsoft Office Live Workspace, a service that will combine Microsoft Office and web capabilities so that documents can be shared online. Recently, Google introduced a technology called “Gears” that allows developers to create web applications that can also work offline.

The common thread between the recent moves of these technology titans: Each company is placing a bet on a new vision of software’s future, one which combines the features of web-based applications with desktop software to create a hybrid model that may offer the best of both worlds.

Even smaller companies are introducing products to support this hybrid model that bridges the divide between web and desktop software. For instance, the Mozilla Foundation — the organization behind the Firefox browser (a major rival of Microsoft’s Internet Explorer) – will be launching an initiative called “Prism.” According to Mozilla, a non-profit group that develops open source software, Prism allows web applications to run outside the browser and behave more like desktop software.

Until recently, most software ran entirely on the user’s computer. This so-called “desktop” software — which includes everything from Adobe Photoshop and Microsoft Office to computer games –relies on the processing power of the individual user’s PC and provides the ability to store files locally on the user’s hard drive. While desktop software still dominates, the web has given rise to a new breed of application — exemplified by products like Google Docs, the company’s online word processor, spreadsheet and presentation software, and Salesforce.com’s enterprise sales-support products — that runs within a web browser. These “webtop” applications use the local computer only to run the web browser and a few basic extensions (like Adobe’s Flash Player) and use the processing power and storage of banks of computers accessed remotely over the Internet.

But as this drive toward hybrid desktop/webtop software illustrates, there are limits to both approaches, and the future for software may be a blend of the best features of both.

Indeed the big question isn’t whether this desktop/webtop hybrid is the future. The question is which company — Microsoft, Adobe or Google — will provide the best platform for developing this next generation of software. The blueprint for this hybrid software model is still being drawn and, while all the major players have moved toward merging features of the desktop with the web, the details of each company’s approach are quite different.

For example, Microsoft sees a world where customers still rely on desktop software, such as Word, Excel and PowerPoint, and use web-based services, like Microsoft’s planned Office Live Workspace, as a supplement to traditional desktop software. Adobe is developing software tools that allow web-based applications to run on the desktop as equal partners to traditional desktop software and take advantage of the full capabilities of the user’s PC. And Google sees a world where most software is web-based and yet can use the local PC as a resource for temporary offline storage.

The most likely outcome is a hybrid future where desktop and web-based software and services become intertwined to the point where users won’t know the difference between the two.

The Players, and Possible Winners

How does each of the major software companies see the future integration of the web and desktop? Here are respective blueprints from Adobe, Microsoft and Google.

• Adobe recently launched the second “beta” (test) version of the Adobe Integrated Runtime (AIR, formerly known as “Apollo”), a software development platform that allows developers to use web programming languages to create applications that can run as desktop software programs and will work on any of the major PC operating systems: Windows, Mac OS and, in the future, Linux. AIR applications can run both online or offline and can read and write files to the local PC just like desktop software. Some of the companies that have demonstrated AIR applications include AOL, eBay, Nickelodeon, Nasdaq and Salesforce.com.

• Microsoft also has a vision of the hybrid future with a strategy heavily reliant on desktop software that it calls “software and services” in contrast to the more web-centric view of “software as a service” frequently espoused by companies like Salesforce.com. The embodiment of Microsoft’s approach is its Office Live Workspace, a web-based supplement for Microsoft Office that allows Office customers to store documents on the web, view them online through a web browser and share them with others. Microsoft sees Office Live Workspace as an extension to, not a replacement for, its Office desktop software. According to the company’s plans announced on September 30, users without Microsoft’s desktop software will only be able to view and comment on — but not edit — the online versions of Office documents. Microsoft’s goal appears to be to protect its lucrative desktop software franchise while hedging its bet against the rise of advertising- and subscription-based web services.

• In contrast to Microsoft’s desktop-oriented view, Google is placing its bet on a primarily web-centric vision of software delivery. Google Docs (formerly known as Google Docs and Spreadsheets), provides online versions of tools for word-processing, spreadsheets and presentations. These applications run entirely in the web browser and currently depend on Internet connectivity and remote file storage, although the company’s Google Gears could allow web-based applications to run offline in the future. Matthew Glotzbach, product management director of Google Enterprise, said at the Interop 2007 Conference in New York on October 24 that Google runs its own productivity suite internally and is confident that web-based software is the future. “The game is changing the current set of productivity tools that were created for personal productivity. We’ve moved to this networked world where everything being online all the time is a huge advantage.”
Microsoft, for its part, shows signs of addressing the threat from Adobe through both direct competition and counter positioning. As Adobe’s Flash became more dominant on the web and grew to become the video format of choice for popular web sites like YouTube and MySpace, Microsoft introduced its own browser plug-in for rich media, called Silverlight, to address the Flash challenge head on. But Microsoft doesn’t have a direct analog to Adobe’s AIR, choosing instead to promote its own strategy of desktop applications that connect to the web rather than embracing the cross-platform, hybrid applications Adobe sees as the future.

The Hybrid Software Future: A Realistic Choice

Google’s vision of purely web-based, hosted software isn’t likely to play out for years. For that reason, the hybrid software model looks appealing to many.

This model is likely to develop in two phases. In the first phase, applications will provide essentially the same features as a desktop application, only you will now be able to access them from anywhere. Current web-based apps are good examples of this. For example, Yahoo Mail looks a lot like Microsoft’s Outlook email program. Google Docs and Adobe’s Buzzword mimic Microsoft Word and add perks like the ability to access your documents from any computer.

In this phase, desktop applications will offer more features than web-based software, but over time that advantage will erode.
In the second phase of this hybrid model, web applications and desktop software will co-mingle. What’s likely to be more exciting is the next phase, where these web-based applications can interact and share data with each other and become platforms [that developers can use to build more software]. Facebook has already become one such platform, as has Salesforce.com on the enterprise side. In the next phase, far more interesting things will happen as these web apps start talking to each other.

Show Me the Money

No matter how software’s hybrid future develops, there is no shortage of possible business models. But, as with the issue of which architecture is best, which approach to generating revenue will be the most successful in the future remains to be seen.
Google is generating considerable revenue selling advertising on its free web-based applications. In addition, Google Apps Premier Edition is available for an annual per-user fee. Adobe intends to profit from selling software development tools used to create both web-based and hybrid applications. Microsoft hopes to blend desktop software licensing and subscriptions with advertising.

Following Google’s success, many software vendors are pursuing advertising for their current generation of web-based services. On October 24, Microsoft spent $240 million for a 1.6% stake in social networking site Facebook. The move gives Microsoft a high-profile customer on its adCenter advertising network. Microsoft also paid $6 billion for online advertising firm aQuantive in May. The plan: Become a large advertising player so it can monetize its web sites and online services to protect against potential future trends away from its traditional revenue streams of PC operating systems and desktop software.

“We’re aiming to become one of the major players in the online advertising space, and we are pleased by the progress we are making in putting the building blocks in place,” said Google and is advertising throughout its web-based applications, but offers this software ad-free for a fee. In addition to its advertising-supported edition of Google Docs, Google also provides a Premier Edition that offers more storage and support for $50 a year per user. Other companies, such as Salesforce.com, rely primarily on subscription-based revenue.

Adobe’s business plan for the hybrid future is an extension of its current revenue model.

But for these hybrid models to develop further, a series of challenges will have to be overcome.
One of the larger challenges will be security, that web applications aren’t necessarily less secure than desktop applications. In fact, web-based services can be more secure since they can automatically update themselves to prevent attacks. However, security risks will increase as web-based applications mesh with desktop software because there will be more points for hackers to attack. Security is only as good as the weakest point.

Data is another concern since, with web-based services; individuals will increasingly store their information on servers run by external companies. In the end, every individual and company will have to assess the potential security risks with hosting data online versus on their desktops or on servers inside their company’s firewall.

Previous web services efforts, such as Microsoft’s Hailstorm in 2001, failed because “large corporations, like financial institutions, didn’t want their customer data managed by someone else.” In the long run, however, these security issues will be overcome.

Any gap between web and desktop software will narrow in the future, one wild card is how well hybrid webtop/desktop applications will match the features of their desktop cousins.

Software companies are now looking for ways to address the limitations of purely web-based applications by developing a new type of hybrid software — one that melds the best features of desktop and webtop into a single, seamless environment.