Comments on: Software as a Service Stocks: What Went Wrong? http://www.mspmentor.net/2008/03/20/software-as-a-service-stocks-what-went-wrong/ Managed Services & Cloud Services Blog for VARs & MSPs Tue, 14 Feb 2012 18:25:29 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Jesse Kliza http://www.mspmentor.net/2008/03/20/software-as-a-service-stocks-what-went-wrong/comment-page-1/#comment-3877 Jesse Kliza Thu, 20 Mar 2008 18:56:24 +0000 http://www.mspmentor.net/2008/03/20/software-as-a-service-stocks-what-went-wrong/#comment-3877 Nice post Joe. I'm a firm believer in the long term success of SaaS. Inherently, SaaS is not an early maximized profit business model. It takes time for SaaS ISVs to reach scale. Reaching scale = Increased margins, because the cost of servicing a tenant continues to decrease. The market is still maturing. I personally wouldn't shy away from investing in SaaS companies that prove to have a strong understanding of the intricacies of the business model. I'm still looking for a SaaS mutual fund :-) http://blog.metricz.com/2007/11/saas-mutual-fundwhere-are-you/ Nice post Joe.

I’m a firm believer in the long term success of SaaS. Inherently, SaaS is not an early maximized profit business model. It takes time for SaaS ISVs to reach scale.

Reaching scale = Increased margins, because the cost of servicing a tenant continues to decrease.

The market is still maturing. I personally wouldn’t shy away from investing in SaaS companies that prove to have a strong understanding of the intricacies of the business model. I’m still looking for a SaaS mutual fund :-)

http://blog.metricz.com/2007/11/saas-mutual-fundwhere-are-you/

]]> By: Justin Crotty http://www.mspmentor.net/2008/03/20/software-as-a-service-stocks-what-went-wrong/comment-page-1/#comment-3870 Justin Crotty Thu, 20 Mar 2008 16:06:17 +0000 http://www.mspmentor.net/2008/03/20/software-as-a-service-stocks-what-went-wrong/#comment-3870 Joe - great observations. Another key driver of lackluster performance in this space is simple fragmentation of the market. In the early days of any new market, there are many small players - many of whom simply will not make it over the long haul. Many will go broke, be acquired or their strategies will fail. This significant fragmentation makes it difficult to understand who to bet on. I think the returns we are seeing, combined with a softer economic environment, illustrate that investor confusion. This is not to say the trend isn't real or the concept is flawed - there are many indications that this model will succeed long term - but rather that the number of players and the relatively small size of each makes it difficult to gauge at this stage who will be left standing as the market matures. Joe – great observations. Another key driver of lackluster performance in this space is simple fragmentation of the market. In the early days of any new market, there are many small players – many of whom simply will not make it over the long haul. Many will go broke, be acquired or their strategies will fail. This significant fragmentation makes it difficult to understand who to bet on. I think the returns we are seeing, combined with a softer economic environment, illustrate that investor confusion.

This is not to say the trend isn’t real or the concept is flawed – there are many indications that this model will succeed long term – but rather that the number of players and the relatively small size of each makes it difficult to gauge at this stage who will be left standing as the market matures.

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