Microsoft To Get Connected; Hosted Applications Take Off

Last week, Microsoft CEO Steve Ballmer discussed the software giant’s plans for adopting a “software plus services” model over the coming years, which will push Microsoft’s traditional desktop software into the realm of hosted applications.

Generally speaking, hosted applications run on servers in the network or on the Internet instead of locally on a user’s computer. In this model, the majority of the computing work is done remotely, using the computer as a terminal for receiving input from the user and displaying images on the screen.

Microsoft’s stated plans don’t fully embrace this concept as they’d prefer to retain the importance of the desktop and running applications locally, but these remarks prove that they can no longer ignore the increasingly competitive hosted alternatives that can run through a standard web browser.

Salesforce.com is a leader in this space with their hosted CRM solutions. What I find most interesting about their solution is their AppExchange, which has created a virtual marketplace for applications that add onto their core functionality.

Google is another major force in this space as it continues to build out its hosted alternatives to Microsoft stalwarts like its Office suite.

There are also a host of exciting newcomers, including Iceberg on Demand, a startup currently in private beta that promises to enable anyone, regardless of their knowledge of coding, to create custom hosted business applications.

Hosted applications offer a number of advantages. They lower the need for having super fast computers to run applications; they eliminate having to continually update software locally; they often provide anytime, anywhere access to applications, unleashing them from being tied to individual computers.

At the same time, they tend to rely entirely on broadband networks in order to work. Hosted apps can run great, but only as long as their Internet connection doesn’t go down.

While for the most part they’re not overly bandwidth intensive, they are very sensitive to lag. The idea of hosted applications is to make them feel as though they’re running locally, but that demands very low latency in order to not incur issues like having your cursor not be able to keep up with your mouse as you try to navigate an application.

Alongside all this growth is a push towards enabling hosted applications to also run locally, which can ensure they will continue to work regardless of the available connectivity. The biggest player in this push is Adobe with their AIR platform (until recently known as Apollo, AIR stands for Adobe Integrated Runtime), which will enable Flash applications to be built so they can run locally while offline.

In some circles, there’s a belief that one day in the not too distant future we’ll be in a world where all applications are hosted and run over the network. I’m not willing to go that far, but it is a fascinating space that’s driving a tremendous amount of innovation and that will likely increase demand for reliable, low latency broadband connections both in the near and long term.