Delivering services or buying software?

It's been a while, since I started noticing that most biggest software companies are trying to settle their business around service delivery, rather than creating conventional software. Indeed, have you asked yourself why SAP are so successful, what are they delivering so unique to its customer that it has such a huge revenue? Well, the answer is that they are not selling software, they are selling the service! I don't want to get into the shoes of their accountants, but they are really making a huge revenue where their customers don't actually have anything in their hands forever - they just pay their subscription for a given period for a given pack of services and that's it! You need assistance - SAP is here, you need education - SAP is here, you need a new feature - SAP is here, but you are not actually buying all these - you are just paying for the services.

Recently, we have been witnesses of the great success that Google. And what they have, is it an operating system? Is it a software that is so unique?No. They provided to its customers the service to be able to search very efficiently. Well, after that they have many other services like GoogleTalk, Google Video etc, but still their "customer" are just using the service rather than buying it.

And guess what - Microsoft whose biggest income so far has been from its operating systems and Microsoft Office, they are now trying to settle into this business too, because it is obviously very profitable. Go to Windows Live and you will see what I am talking about - very useful services like MSN Messenger, Security, Favorites, etc. Microsoft is planning to fight for Internet users and because of this they are now restructuring and investing in their MSN group. And I am sure that pretty interesting things are about to emerge.

But yeah, I believe that in the future the share of IT market that services are going to occupy will become dominant as opposed to the traditional software. Actually, take a look at this article: CSFB says 'traditional software is dead' (link). There you will see that this time this will happen is not too far away...