In all the hype around Software as a Service (SaaS) as a way to bring down prices and drive value to the customer, one thing is conveniently overlooked:.
As Chris Keene, CEO of Wavemaker, suggests, however, SaaS may well succumb to the same forces that are driving software to open up:
Although SaaS development platforms like SalesForce and Coghead have gotten a lot of attention, this market has so far been remarkably closed and proprietary. The Platform as a Service leader, SalesForce, has both a draconian hosting policy (host your apps and data anywhere, as long as it's with us!) but also a proprietary language (who needs Java when you've got Apex!?).
Moving forward, the same trends driving open source adoption everywhere else in the industry will ultimately drive SaaS adoption of open source, particularly by ISVs whose business plan does not include a low multiple sale to their proprietary hosting provider. Future SaaS platforms will converge with traditional tools, offering on-demand development based on traditional programming languages with built-in tools for mash-up based development for basic users.
Who will drive this move to open? Well, Chris clearly feels that his company, Wavemaker, will be among them (though I have money on Bungee Labs to help fuel this move, as well: Bungee is not nearly as closed as Chris' post would suggest). But the real driver of this will be Google.
Google already has open-source Gears, and is also increasingly opening up its App Engine. Over time, Google will determine this market, and its stance is increasingly open. Open source, open APIs, and open data.
At that point, service will determine who wins the most customers and operational efficiency will determine who profits most from them. The former will be increasingly influenced by those vendors who make "software" easy to use. The latter will be influenced by those who quickly learn to manage scale through tools like Reductive Labs' Puppet, Amazon's EC2, etc.
Disclosure: I am an advisor to Bungee Labs.