Nicholas Carr is a well-respected thought leader who we have agreed and disagreed with in the past (see here and here). A few weeks ago, he posted The Cloud’s Not So Silver Lining as a response to Sarah Lacy’s article in BusinessWeek. Once again, Mr. Carr, we respectfully disagree, and hope to have a spirited debate on the topic and we would appreciate the comments and insights from both our readers and yours.

He describes how the software as a service (SaaS) model and on-demand computing is not a gold mine for software vendors.

Anyone who thinks the software-as-a-service business is a gold mine for vendors is wrong. The economics are fundamentally different from those of the traditional software business – and not in a good way. As Lacy writes, the Web is “just as good at displacing revenue as it is in generating sources of it. Just ask the music industry or, ahem, print media. Think Robin Hood, taking riches from the elite and distributing them to everyone else, including the customers who get to keep more of their money and the upstarts that can more easily build competing alternatives.” Web apps remain a hard sell when it comes to big, conservative enterprises, and the capital and marketing costs are daunting, particularly if you’re running your own data centers. This revolution in business software will play out slowly and, for most suppliers, painfully.

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