A world of uncertainties for application software vendors

The application software industry is changing at a faster rate than any time in its history. Overall industry growth is slowing, there are far more opportunities for missteps, and the risks of error are higher than ever.

An independent software vendor (ISV) looking to enter, build or maintain a strong position in today's application software market faces a number of fundamental decisions. In addition to market-specific questions, ISVs must assess such broad issues as whether to:

- Enter a market that many claim is well into a final consolidation phase.

- Develop an n-tier application that customers can deploy in-house, or develop an Internet-centric, multitenant application to be offered primarily as a service.

- Develop their own application infrastructures from best-of-breed components, embrace standard infrastructure stacks (preintegrated combinations of .Net-, Java 2 Platform Enterprise Edition-, Linux Apache MySQL PHP [LAMP]-based middleware) or develop atop even higher-level horizontal application platforms (such as SAP, a Windows/Office combination, the salesforce.com-hosted platform).

- Continue the time-honored practice of pricing server software per CPU, per server, per user or under other established licensing models; move to usage-based, subscription or other innovative pricing models to accommodate virtualized architectures; or avoid this issue altogether by giving software away and charging for support.

- Open source the application code, maintain it as proprietary or pursue any of a number of hybrid models.

- Invest heavily in marketing, or channel the vast majority of investment into engineering and rely on viral marketing to generate adoption.

About the only certainties in an ISV's world are that it must develop modularly to fit within the emerging world of standards-based service-oriented architectures (SOA), and its applications must be optimized for Internet-based access and service delivery.

Beyond these givens, pretty much everything else is surrounded by uncertainty. Developers must make some fundamental decisions about the future IT industry and environment and the role they want to play in that future. Although most of these decisions must be unique to the particular ISV, all must begin with an assessment of some key industry trends and the risks and rewards that different combinations of choices may entail.

To that end, let's assess the Myth/Reality Index for five critical assumptions that have the potential of reshaping the applications industry, with zero being total myth, and 10 being absolute reality.

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