Installable vs. Hosted

37signals doesn’t want to do installable software, Ask 37signals: Installable software?:

If we built installable software we’d have to spend a lot more of our time on technical support, write a lot more documentation, slow down our development process, and lose a fair bit of control over our customer experience. For some companies this wouldn’t be a big deal, but for us it would be a real drag.

Of course, I recommend you read all of Jason’s commentary before continuing. Done? Okay…

I think that Jason is overestimating how hard it can be to produce an installable version of a hosted product. I say “can be”, because how an application is built can certainly make it harder. Many small companies (too many to name!) are building nice, installable web-based apps.

Offering a hosted webapp is a great business model for the reasons Jason cites. It’s also good for customers, because they can be up and running in an instant. I wanted to try out FogBugz and had my own instance within minutes. And, of course, 37signals doesn’t have to worry about Basecamp showing up on warez sites. Or the fact that everyone can read their uncompiled Ruby code.

However, I think for a many apps, quite a few potential customers will be left behind by only offering a hosted version. One criticism of Google Apps that I’ve seen mentioned is that not everyone wants to entrust all of their private documents to Google. I think Campfire looks like an interesting product, but I wouldn’t want to store company confidential exchanges in there.

I’ve seen a number of products start off with one approach and then add the other. I can name two off the top of my head that started off installable and added a hosted option. In some ways, that’s easier because you don’t have to worry about supporting the service 24×7. There are always tradeoffs in product management, aren’t there?

I should also mention the middle ground: selling an appliance. This is what Arbor Networks does. Ship a computer, preconfigured and ready to run, to the customer. They plug that in, do a small bit of configuration (IP address setting, for example) and they’re up and running! I’ve predicted before that Google Apps will eventually be offered this way. We’ll see…

Also, you can be just as agile with an installable app if you wish to be… There has been an update to OmniFocus just about every day (including weekends!) since I installed it. If you make it easy for people to install and upgrade, there’s no reason you can’t ship minor updates as frequently as you wish.