I recently spoke with John Voorhees, General Manager for ASPE-IT, about how things like Chrome OS and ‘tablet’ products  may impact the software industry. According to John, “There is clearly a growing trend toward the use of low cost, core function applications that do not require complex and expensive software licensing. Operating systems may also eventually fall into this area.” He believes Microsoft will increasingly be challenged to maintain its grip on the consumer and small business segment of its core licensing revenue stream, especially where it involves licensing of Microsoft Office and the Windows Operating System. “It seems reasonable to assume that they will have to give up some ground in the consumer and small business apps and client space in order to focus on and protect the enterprise client-server market space. The likely decline in revenue from the consumer-oriented segments simply won’t justify the ongoing investment being made.”

As our conversation progressed, we quickly segued into a discussion about the appeal of Google Apps and OpenOffice for small businesses. John said, “I can absolutely visualize a time when consumer/small business oriented applications such as word processing, spreadsheet and presentation software become a much more fragmented market where Microsoft consistently loses share to lower cost offerings. The average consumer and small business user simply does not need a significant portion of the functionality that is being incorporated into the MS Office suite.” With almost 75% of Americans now on the web, the comfort level of the average person with web-based products will continue to increase, and the move away from MS Office will seem less intimidating. Now that Google Apps has a built in feature to ease the migration of your organization away from Office, we could see more and more of the business sector make the change. It is possible that Microsoft may choose to tier their Office product offerings, perhaps giving consumer users an “Office Lite” option at a greatly reduced license price.

We agreed that client OS is likely to go the same direction as the software complexity to run a single machine is not great, and can be met with something less complex and more cost-effective than the ongoing versions of Windows. John took it a step further saying, “Given the shift in client computing to ‘pad’ devices, handhelds and phones, the current concept and technology roadmap of the core Windows OS may become essentially irrelevant over time. Already some manufacturers of netbooks are pre-loading Ubuntu as the operating system rather than Windows.” With Dell and other companies scrambling to produce tablets that perform more than just e-reader functions I think we’ll see a mass adoption something like we did for the iPod down the road. Whether that migration will be to iPads is questionable, but since they have the most capable tablet at this point Apple definitely is ahead of the pack. The business case for tablets has yet to have been fully presented for the masses, but as more and more niche benefits are found for early adopters a truly paperless office using a tablet and laptop model could be around the corner for creative and high-tech environments. If the iPad continues to lead that charge, Microsoft’s stronghold on the business sector could be threatened.