Software firms buy into hybrid future

The rise of smartphones and tablets have led to more software being bought online through app stores but boxed software is still appealing thanks to individual or corporate inclinations and rising threats in the mobile landscape. These developments mean a hybrid sales strategy would be the way forward for many software firms, said insiders.

Amar Hanspal, senior vice president of platform solutions and emerging business at Autodesk, said that in the past five years, cloud computing has moved from being an extension to the "very core" of the desktop computing experience. The evolution of app stores, he added, is an example of this phenomenon as they have enabled companies to rethink product experiences based on the assumption that everyone is connected to the cloud.

"App stores are one way to provide a dramatically superior customer experience on a number of fronts and I think we will see this evolve over time," the executive said in an e-mail.

"The app store model is also a big opportunity for emerging markets as it is a more effective delivery method for products, and will also help to ensure license compliance."

That said, he reckons the main obstacle Autodesk faces in the move from selling its 3D design software via physical storefronts to virtual ones is "capitalizing on the opportunity to improve the end-user experience at every level". According to him, if a company takes its physical footprint and simply digitizes it online, the company will not be able to get through to new customers. Getting through to new user groups is the opportunity virtual stores provide, he explained.

"An online storefront engages a generation that is familiar with the user experience of an [Apple] iPhone, the immediacy of Google search, the connectivity of Twitter and the graphics of a [Microsoft] Xbox console," Hanspal said. "That's the expectation you have to meet online with an improved user experience.

Internally, the company would also have to change its corporate culture in terms of the product cycle time frames from a physical storefront model to a digital one, he added.

Security a concern
However, while companies are getting familiar with purchasing software online, Trend Micro's head of consumer in Southeast Asia, Terrence Tang, said mobile threats are on the rise and this represents another challenge for virtual storefronts.

In his e-mail, Tang pointed to 2010 as the year in which more sophisticated threats targeting mobile devices were observed. For instance, the first Android operating system (OS) Trojan was discovered last year while the popular Angry Birds game has over 300 malicious versions of threats written to target its gamers, the executive elaborated.

"Data security becomes critical while purchasing a product online and can be a big pain point for consumers," said Tang. "Without a doubt, cybercriminals will act quickly to tap on this trend to infect legitimate apps with malware, which would then give them unauthorized access to users' devices and steal confidential data."

Another company, Singapore-based design education software reseller 3D ClassWorks, also pointed out that the emergence of mobile apps and app stores provides the opportunity for companies to differentiate their products.

Elaborating, company CTO Chevy Kok said app stores bring about a "democratization of software availability" as mobile apps are now readily accessible by the masses and cost of ownership is brought down. "I think app stores are great for low-cost products and a great entry point for young software startups," he added in an e-mail.

At the same time, companies cannot do without having an actual sales team, particularly if it is selling "high value software", he pointed out. If the software sales go into the range of thousands to tens of thousands of dollars, buyers will need a "human touch" to the sales process, he explained.

"It's like buying a car. We usually want to test drive it physically and would expect the salesperson to make the buyer feel that the car is value for money. I seriously don't think I would buy a car from an online store!" added Kok.

Creating hybrid sales model
That is why the company is aiming for a hybrid sales channel in which products will be tiered for both high-value boxed software and "low-value" mobile apps, revealed Kok. For example, he said a "lite" version of its software can be distributed via the app store for users to try out, with the option of upgrading to the full-fledged boxed version later.

Autodesk's Hanspal, too, indicated that the company will move toward a hybrid sales strategy. This is because every customer "moves at a different speed" due to personal choice or corporate necessity, so it intends to provide software in boxed and app formats and let users choose, he explained.

"This [period in time] is similar to when software was available on 40 diskettes or 1 CD, movies on DVD or Blu-Ray format and CD or online music services. We expect the online delivery model to enable us to expand the types of solutions we offer to our customers," he said.