Appliance Apocalypse

The days of appliances for software distribution are numbered.

I have held suspicions about the long-term viability of appliances, which for the uninitiated are servers shipped to customers with software suites pre-installed. As servers became commodities and thus a minor part of the total cost of deploying a solution, many bright vendors realized that they could make customers happier (less deployment work) and reduce tech support expense (fewer customer deployment mistakes) by bundling everything on a box that could be racked, powered-up and added to the local network.  This also generated a great deal of customer good will through rapid success with the product, which in turn generated good buzz, more recognition, more sales, etc.

Appliances however predated mass acceptance of virtualization and clouds, which have removed much of the value add of appliances. Even small organization rack all new servers with virtualization installed. The reasons for doing so are numerous but the side effect is that technical buyers now provision virtual computers for all projects. They even install hypervisors to support single instances of an operating system in order to buffer hardware variations from machine to machine (one analyst recently quipped that you can buy 1,000 servers with identical SKUs from the same vendor and not get 100 identical servers).

Hell, I run VMWare on my laptop.

Will appliances disappear? Not entirely. Oddly enough appliances will go down-market, being offered to smaller and smaller buyers whose tech staffs have trouble tying their shoes much less installing Linux, MySQL and applications. In other words appliances will eventually become an option for the least sophisticated buyers.

With SaaS the growing rage, appliances may not be lucky enough to even go bottom fishing.

My first hint that appliance fortunes were going south was SugarCRM. For a long while they touted being able to buy Sugar as a service (SaaS), as on-site installable, or as an appliance. Oddly that last option has disappeared from their home page list of alternatives (click the pic to see the SugarCRM homepage of this morning). On-demand and on-site, but not on-hardware. The product (known as the Sugar Cube — how cute) still exists but appears to be in the first phase of phasing out. Perhaps I speculate too much, but pulling the appliance from the home page, removing it from the main product page and making it a footnote elsewhere is not a strong statement of support.

What should you do? That depends on your product’s market and segmentation. If your segments indicate buyers are likely users of virtualization or SaaS, then appliances will gather dust on your selves, tying up your cash. Conversely, if you have a product from which customers rapidly receive benefits and if SaaS alternatives are not readily available, there may be demand for appliances. If you are in a competitive market and your competitors do not offer appliances, you may find low hanging fruit and a modicum of differentiation.

Otherwise appliances may be a dying solution.


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