Where Will You Shop for Cloud Computing Services?

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Last week, THINKstrategies hosted a one-day forum, called the Cloud Channel Summit, to discuss the changing nature of the channel in the Cloud marketplace. On that same day, Best Buy announced its acquisition of mindSHIFT, a Cloud computing service provider. The announcement is the latest indication that Cloud computing is becoming mainstream and Cloud services are finding new channels to market which will make them even more pervasive.

This is a move that I’ve been predicting for a number of years and one which cements the emergence of the ‘Cloud’ as a legitimate alternative to traditional, on-premise systems and software for organizations of all sizes across every industry.

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Retailers, like Best Buy, have been major distributors of hardware and software, as well as phones and other mobile devices, for many years. Whether through their brick-and-mortar stores or ecommerce sites, they have served the IT needs of consumers and small businesses seeking economical office technology.

And, over the past decade, these retailers have recognized that they have an opportunity and responsibility to provide a variety of IT support services, both in-store, onsite and online to help their customers deploy and maintain their office equipment. Best Buy’s acquisition of the Geek Squad set in motion a series of retailer moves into the IT support business, such as Staples’ purchase of Thrive Networks in 2006.

Some people might scoff at the idea of a ‘big box’ retailer selling Cloud services and suggest that this could throw off the ecological balance of the IT industry. Yet, it is the ubiquitous availability of computers, smartphones and tablets at these retail outlets that has already helped to encourage the ‘consumerization of IT’. This trend has created unprecedented challenges for IT organizations seeking to control the use of these technologies within their businesses.

With the rise of tech-savvy workers has come greater employee demands for more useful business applications that can enable them to more easily perform their jobs. This has fueled the explosive growth of Software-as-a-Service (SaaS) alternatives to traditional business applications. And, the success of SaaS has sparked the broader array of Cloud computing alternatives flooding the market today.

While every major vendor is rolling out Cloud offerings to keep pace with the Cloud pioneers, traditional computer and software channels are also trying to get into the act. Best Buy’s acquisition of mindSHIFT gives the retailer a set of Cloud, data center and professional services that already support more than 5,400 corporate clients and manage over 25,000 desktops across the United States.

Like many of the independent Cloud service providers (CSPs), mindSHIFT’s roots are in the managed services arena. So Best Buy can now reduce the costs of onsite support previous generated by its iconic Geek Squad VW ‘bugs’ by offering a wider assortment of more economical and proactive remote, managed services.

Like many of today’s Cloud services, the managed services are often sold on a subscription basis. This gives the retailer an annuity revenue stream which can also offset the financial pressures which many retailers have faced due to the downturn in the economy.

Just as retailers have become dependent on selling PCs, smartphones and tablets as a major share of their revenues as the demand for paper and pencils declines, they are becoming more attracted to Cloud services as customers become less interested in traditional IT products. You can bet that they will be advertising and promoting their Cloud services in a way that will further legitimize them in the eyes of business end-users, corporate executives and consumers alike. Their mass marketing campaigns will fuel greater demand for Cloud services.

A growing number of CIOs and IT organizations are recognizing these trends, and establishing policies and procedures which enable their employees to acquire approved personal computing devices and software services from a variety of sources.

Those who aren’t moving in this direction are ignoring today’s realities and will have to deal with the fallout when they discover that their employees are making unilateral moves to the Cloud without IT’s guidance or supervision.

Meanwhile, expect to see more Cloud services at a store near you.

Kaplan is Managing Director of THINKstrategies (www.thinkstrategies.com) and the founder of the Cloud Computing Showplace (www.cloudshowplace.com). He can be reached at jkaplan@thinkstrategies.com.