Infrastructure as a Service (IaaS) is already consolidating.  Terremark, Savvis and NaviSite have merged into large Operators.  AWS, RackSpace and SoftLayer are growing and tuning their services to provide the most cost effective solutions for virtual data centers.  It seems apparent that IaaS is established and the players are slugging it out for market share.   But what about Managed Service Providers providing IT as a Service?  What is their future? 

To remain relevant they will need to increase their value with mass market appeal or be swallowed up by a bundled service offering like Google Apps or Office 365.  Change is on the horizon and service providers embracing this change will thrive. But wait a minute.  It seems too soon to start the funeral dirge for Managed Service Providers who provide IT Outsourcing, doesn’t it?  Can we learn anything from our history in the Internet regarding who will flurish and who will vanish. 

Take Myspace for instance.  Once the darling of the Internet, this social media phenom was purchased for $580 Million by News Corp because it was supposed to be the next generation of everything (electronic) social media could be.  Six short years later the company sold for a meager $35 million. Doesn’t this seem ironic with Face Book’s Market Cap in the tens of billions? Are there parallels in the new generation of application service providers?  What happened to Myspace and is it relevant to hosting companies who are now at a cross roads for future services?

In a recent Business Week article, Shawn Gold, former head of Marketing and Content for Myspace was quoted, “There was a lot of pressure to drive revenue.  We went with a lot of products that were shallow and not the best products in the world”.  The brand of any business, and especially those in the Internet space drives sustainable revenues.  If you lose your brand or it becomes hazy, customers will lose their faith in you. As a Managed Service Provider wouldn’t it make sense to build brand around existing profitable services and then expand into new ones?  There is a critical balance between keeping existing customers happy with your IT Outsourcing business and exposing them to a new way to do business.

This is where Desktop as a Service comes in.  Extending your brand by providing DaaS as a next generation service will not only differentiate your Cloud services IT Outsourcing business today, but cement you as a trusted advisor for the future.   The more proactive you are in helping business customers understand where the future of Cloud services are, the more they will want to use you to enable them.  The future of Cloud services are in the hands of the MSPs who will take these steps.  IT Outsourcing isn’t going away any time soon… it’s just morphing into a new business model that includes bundled services that look more like a “product” than billable hours.