Brad Feld

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NewsGator’s Roadmap – Shrink-Wrap, Appliance, or SaaS?

Jun 29, 2006
Category Investments

Greg Reinacker – NewsGator’s founder and CTO – has a two part roadmap post up.  His first post summarizes what NewsGator has been up to over the past 18 months.  His second post talks about where NewsGator is going with their products. 

I’ve heard plenty of chatter lately about the fundamental differences in enterprise software between shrink-wrap software, appliances, and hosted (or SaaS) software.  Most VCs I know have fallen in love with SaaS – often without understanding the fundamental economics of the SaaS model (“trendy is good – thank you SFDC”.)  Others are convinced there will never again by any life in enterprise software – which is just fine with me as I love a counter cyclical trend (e.g. enterprise software is my friend again – but don’t worry, I’ll stay away from the “marketing automation” vertical.)

I’ve got a lot of experience with each delivery type (Rally provides SaaS, StillSecure provides shrink-wrap and appliances, Klocwork and Newmerix provide shrink-wrap, DataPower (now part of IBM) provides appliances, and the list goes on and on. 

NewsGator provides all three – shrink-wrap and appliances have been shipping for several quarters (and Greg interestingly points out that most of our customers are more interested in shrink-wrap software rather than appliances) and has announced (and is about to release) a Japanese version of the SaaS enterprise product with US and European language versions coming soon.

I’ve been involved in more than my fair share of “should we do another type” conversation, especially going from SaaS to shrink-wrap (“but our clients want to deploy our software behind the firewall”) and from shrink-wrap to appliance (or vice versa).  Given the architecture of NewsGator’s products, we are able to give our clients the ultimate choice.

Interestingly, Symantec has recently decided to ditch their appliance products.  Their assertion is that with the growing oversupply of excess underutilized server hardware in corporate IT shops, why would you want another rack mounted box that’s dedicated to a specific task?  An appliance is certainly interesting to part of the market – which is why NewsGator provides it that way – but unless you are doing something specific in silicon, or need tight integration with the underlying hardware, shrink-wrapped software – especially with today’s virtualization technology – is often a better and more cost effective choice.