The MSP business model
Most MSPs operate on two different service platforms: break/fix and managed contracts. A break/fix platform is exactly what it sounds like: when something breaks on a customer's computer, the MSP goes out to fix it. MSPs using this model will charge for equipment, as well as by the hour for replacing the computer parts. On a managed contract, the customer will pay the MSP a set service fee every month to watch and maintain all their computers. If something breaks, the MSP will come out and fix it, and no additional fee is charged because it's part of the contract.
SaaS and The Cloud
One of the terms that's currently being bandied about when talking about MSPs are "the cloud" and "SaaS". The cloud simply refers to the process of moving applications from server based technology to hosted technology available from anywhere. You're already using cloud technology if you use any Google applications, such as Google Docs. Microsoft currently offers many of it's Office programs in an online service called Office 365. These platforms are also sometimes referred to as SaaS, which stands for "Software as a Service". Instead of buying the software outright, you instead rent it at a fixed price, typically paid per month.
The Future for MSPs
Some analysts are predicting a bright future for MSPs, as companies start cutting costs by reducing IT staffs, while others think that MSPs might be in trouble as the big boys, Microsoft and Cisco, for example, start coming on board and penetrating the SMB (Small Medium Business) computer management market.