Among the consequences of the Enterprise 2.0 family technologies' growing popularity, we can observe the rise of a set of new business models for the use and employment of software applications, some of them also applicable for infrastructure components. The most popular of these models is by far “Software as a Service” (also called SaaS). SaaS is a software distribution model assuming the software applications are hosted and maintained by the vendor or the distributor, the user access being granted exclusively by means of the Internet. The paper at hand is a literature review and also an action research, meant to provide an objective and unbiased comparison of the two major software distribution models, and also to identify the strengths, the weaknesses and the favorite areas of applicability for each model. The paper is a part of a larger research performed by the author in the field of Enterprise 2.0 technologies.