buy_vs_rent.jpg For the sake of this blog let us get two basic definition out of the way. Cloud is nothing but a computer/software connected to the internet that you may not be managing E.g. Just like how your home connected to electrical circuit managed by your local electric company like PG&E if you live in Silicon Valley. Think of SaaS as software that you do not buy, but instead rent on the internet   E.g. Salesforce subscription similar to a rental car or Uber or leasing. For the experts readers, “I agree, there are 100’s of variations of this definition” . For now, stay simple. Now how is SaaS and Cloud reshaping Silicon Valley ? Silicon Valley is run by investors, large tech corporation, innovators, start ups and of course some really smart developers. All these people collectively and broadly do 3 things. 1. Build a Product 2. Sell the Product 3. Service the product. Now, let us compared to 20 years back and today. 1. Build a Product – Built PCs, Chips, Boards, Networking Gear 20 years back and mostly still do the same, except that they have got more complex.  What has changed with SaaS, Cloud and related evolution is that developers are moving to the next level of abstraction E.g. Virtual machines to container/docker/micro-services. 2. Sell the Product – Most companies bought and owned these products then, but now rent the product with SaaS and Cloud ( now that is a big change ).  Also, now they sell to large cloud provides who pay lesser than individual enterprise customers. Ouch!!! Sun, Oracle, HP, Dell, EMC, Cisco, Netgear. 3. Service the Product – Services  and warranty was healthy when the products and software was proprietary in nature since no one else could easily service them. Now with Open Source E.g. SDN, Container, Hadoop and more such offerings, service and warranty dollars are fading away. SaaS and Cloud companies are bound to adoption more open source than the traditional companies. Let me summarize this in a simpler manner, if more people use Uber instead of owning cars what do you think you will find in most home garages? Lesser number of cars !!. When that happens, what happens on the car dealers and auto insurance? They make less money. The same is happening in the Hi Tech space, except that it is happening at a more rapid pace than most people expected in the silicon valley. 2017 will continue to be brutal for some. The game is more even now for SaaS and Cloud vendors of ALL SIZES in the silicon valley. Comments and debates welcome !!!!

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