Back in the 80’s, as a computer products distributor we utilized Electronic Data Interchange (EDI) with our large customers such as Toys R Us, Sears and NYNEX, but just the data, not the applications were transferred. Then came the software kiosks – which, after several aborted attempts really never stuck, although some game vendors had a little bit of luck with them. Then came email and the Internet, and several more attempts were made to distribute software under the ASP model, accessed through VPN’s and other application interfaces. Finally, Web 2.0 arrived and software downloads, SaaS and Web services have become commonplace.
Mobile is going through the same evolution, albeit in a much compressed timeframe. First the only applications you could access were those deemed worthy by the carriers and delivered via their walled garden networks. On the enterprise side, handheld computer software, such as that used by UPS or FedEx were provisioned by IT. Up until last year, most Palm and Windows Mobile users downloaded software to their PCs and copying them to their PDAs via a mini-USB or proprietary tether or docking solution. Now nearly every application can be downloaded directly to your smartphone over the Web using your HTTP browser.
Two and half years ago, my partner & I were challenged by IT professionals and investors that no one would download software to a mobile device, even thought the carriers’ top data services money makers were ringtones and wallpapers. Today, downloads have become commonplace. So commonplace that it is forever altering the software distribution channel. I can download mobile apps from Google and Yahoo. I visit the Apple Store for music and iPhone applications. The wireless carriers continue to offer software downloads ranging from ringtones to television programming to personal navigation apps and services. Microsoft and Intel are executing on or planning online software distribution centers for their certified applications, ala Apple.
Software has traditionally offered higher margins than hardware to the entire value chain. With shorter product lifecycles, a multitude of platforms and devices and dropping prices, the traditional method of packaged software distribution is rapidly coming to a close. Will the traditional computer products distributors concede all software sales to these new players or will they find new value to add and restructure their services to reduce disintermediation? As an ISV, I can sell directly to the consumer, electronically manage downloads, licenses and updates – why do I need a traditional distributor or retailer? Software distribution logistics and infrastructure has taken on a new meaning in the last 3 years. The shift is well underway and I’m curious to see who will remain in software distribution.
Regardless of your politics, President Obama is right to include digital infrastructure in the national infrastructure rebuilding priority. Software, music, television, movies, phone calls, pictures, maps, curriculum and even equipment service updates are just a fraction of the data, services and content being distributed via a digital distribution channel.
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