TWIS#17 Google Apps Marketplace Special! This Week in SaaS
TWIS#17 Google Apps Marketplace!
- Google Apps launches marketplace this week and TWIS investigates in depth what it means for SaaS
- More stuff on Google Apps
- CrunchGear on Microsoft Innovation (they think it’s dead)
- Appirio on Microsoft’s Cloud strategy (they think it’s alive)
- In other news, Amazon Revenue, Eventbrite
The winners of the conference passes for the London Cloud Computing Congress 15/16 March at Olympia are Matt Johnson and Jonathan Blair. Congrats!
Remember- you can still attend and there are free workshop sessions if you don’t want to attend the main conference. I’ll be blogging from the conference- come and say hello if you’re there too.
I feel like I’ve become a broken record over the last few weeks- repeating over and over again the mantra that SaaS is not low TCO software delivered through a browser.
10 years ago it was.
Not any more.
If you’re going to make money in SaaS, you’ve got to understand the 7 revenue streams and how they effect profitability, differentiation and Customer Acquisition:
Google Apps has long been a thorn in my side- it served as a bad example to the SaaS community that low TCO software delivered through a browser worked as a business model. I had to counter that it isn’t a business and if you have $5 billion of free cash flow a quarter, you too can give away software…
Anyway, this is a joyous week for real world SaaS- Google Apps is launches their Marketplace, their Ecosystem:
Google Apps is more than a suite of cloud apps — it’s an application platform with rich APIs and UI extension points that enable your app to integrate with our apps, so together we can address customer problems like:
- Multiple logins and lost passwords
- Confusing navigation between apps
- Information silos and duplicate data
- Multiple administrative UIs
Once integrated, we can help you reach new customers using the Google Apps Marketplace, an online storefront that allows our 2 million Google Apps customers to easily discover, deploy and manage your app. Here’s a screencast that shows how easy it is for Google Apps admins to deploy your app to their users:
They are launching a “proper” business model and key differentiation to their competition. The same business model and differentiation that makes Salesforce the go-to CRM, because of the AppExchange.
Google’s business model is to take 20% of revenue generated from Marketplace sales- generous compared to Apple’s 30% in the App Store and the Android store.
Google is focused on Messaging and Collaboration from a product perspective and identity and billing from a platform perspective- their mantra is to let the ecosystem provide everything else.
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They went on:
But wait, tell me again why it’s good to integrate with Google Apps?
Our 20 million users are happier and more productive when their apps work well together. And since Google Apps includes daily-use apps like mail, contacts, calendar, and documents, there are a lot of opportunities for innovative integrations to make our apps work well together.
Whether you integrate our apps into your apps, your apps into ours, or both, here are some of the benefits of integrating with Google Apps:
- Solve common user problems: Google Apps APIs for authentication, contacts, calendars, documents, sites, and mail enable integrated features like:
- easy single sign, so your app is always 1-click away when users are in Gmail
- contact integrations, so users can pick and autocomplete from their existing contacts
- shared documents, so users don’t having to upload/download and manage multiple versions
- shared calendars, so users see a unified view of important dates and events across apps.
- Reach early adopters via our Marketplace: The Google Apps Marketplace is integrated into Google Apps itself, making it easier for millions of businesses who have already embraced the cloud to discover and buy your cloud app.
- More time for your core features: Use our open APIs to take advantage of our apps and features, so you don’t have to re-invent a wheel you don’t want to.
They make some excellent points that we’ve been mulling over the last few weeks:
- Leverage a captive and willing audience- The single hardest challenge in SaaS is acquiring customers- not the technology. It’s the only thing not in your control. There is a captive audience of early adopters: 25m+ users and 2m+ businesses. SaaS providers regularly give up 65% to channels- so 20% seems good value.
- Simple Customer Integration- Drive enhanced adoption through simple integration which adds or unlocks phenomenal value- without the traditional costs associated with running your own messaging and communication platform. Plus no IT people to break it either.
- Buy, don’t build– Buy, for free- instead of building your own. Focus on your value add and not on the drudgery. No need to re-invent the wheel etc.
For customers, this means a one-stop shop for a variety of applications that their business or organization can use. And it’s extremely simple to get started with apps in the marketplace — it just takes 4 clicks, Google says (though that initial click will have to come from your domain admin to approve the use of the app). For developers, particularly small startup developers, it means instant access to more users than they can likely imagine. It also potentially means something more important: money.
Like the popular mobile app stores (Apple’s App Store and Google’s own Android Market), Google is allowing developers to sell their apps through this Marketplace. And they’re actually offering a better deal: Google will keep just 20% of the revenue, while the developers keep the other 80% (compared to a 30/70 split with the Android Market). The reason for this better split is that Google believes the B2B market is a bit different, and they want to entice developers to join on board. And instead of Apple’s App Store, which charges a $100 yearly fee to developers, Google is charging a one-time fee of $100 to enroll in the program — and that’s for as many apps as you want to create.
As for what Google will do with their 20% share, they’re not entirely sure. “We don’t know what will happen with the revenue, but we think it’s a very fair rev share for the value we’re providing,” Google Vice President of Engineering Vic Gundotra says.
Maybe in preparation for the marketplace announcement to counter any argument that they’re not Enterprise grade, last week Google announced their Disaster Recovery Strategy for Apps:
Many of us take the disaster readiness of servers and data centers for granted. But for IT admins from both small and large companies, being prepared for disaster and emergency situations is complicated and expensive issue. Google has made an announcement today for any enterprise users of Google Apps; assuring IT admins that the suite is now fully prepared for disaster recovery. Rajen Sheth, Senior Product Manager, Google Apps, tells us that as of recently, Google is prepared for disaster recovery for all of its products in the Google Apps suite, which include Gmail, Google Docs, Google Sites, Google Calendar, Google Talk and Google Video.
Google’s secret sauce is live and synchronous replication. So every action you take in Gmail is immediately replicated in two data centers at once, so that if one data center fails, Google will transfer data over to the other one. Traditionally, Google says, synchronous replication can be very expensive for companies. For example, the cost to back up 25GB of data with synchronous replication can range from $150 to $500+ in storage and maintenance costs per employee. Google says that exact price depends on a number of factors such as the number of times the data is replicated and the choice of service provider. Of course, Google replicates all the data multiple times, and the 25GB per employee for Gmail is backed up for free. And data from Google Docs, Google Sites, Google Docs, Google Calendar, Google Talk and Google Video, which encompass most of the applications in Google Apps, is also synchronously replicated for free.
I wonder if that includes the data within the marketplace apps? Anyway- I haven’t experienced any downtime with my Google Apps account, although I’m told the web interface does go down occasionally- I’ve never had any data loss…
Could the marketplace offering be Google’s key differentiator against Microsoft’s expected online version of Office that’s currently in Beta? It’s going to be hard for them to launch out of Beta with a credible ecosystem. Then what are they differentiating against? Price? Features? Google Apps network effects, next.
OK, I know I said never bet against Microsoft, especially since they spend more on R&D than anyone else, but CrunchGear has an interesting take:
There was recently a little skirmish on the web regarding the question of whether or not Microsoft has stopped innovating — whether the internal corporate culture there has thwarted new ideas, and so on. Well, I think we can all agree that Microsoft hasn’t exactly been an innovation machine in recent years; although, with as little currency as the word “innovation” has these days, that’s not saying much — but the fact is that its products haven’t shown as much ingenuity as its competitors in nearly every arena. And like a dragon guarding its hoard, it has striven primarily to maintain its stranglehold on enterprise, which makes up the vast majority of Microsoft’s treasure intake. Who can blame them? You wouldn’t give up a goose that laid golden eggs either. But the the goose is getting old, and people are getting tired of eggs. What’s the next step?
Gates once famously said his greatest fear was “someone in a garage who is devising something completely new.” So the solution is simple: start building garages.
Of course, we must be fair to Microsoft and say that they probably have as many metaphorical garages as anyone else in the world. Microsoft Research and Microsoft Labs, among many other experimental sections, employ an immense amount of people, and frequently come out with really cool stuff. The trouble is that something in the structure of Microsoft’s complex interlocking-teams method of management prevents these things from being anything other than great ideas. Look at Google. Their “release early, release often” strategy not only familiarizes people with the products, but also inures them to the “beta” process (some more than others), and lastly, allows Google to gauge the weight each project should have. It’s not a failure when something like Orkut doesn’t take off: it’s a successful risk assessment
Sounds like lean startup methodology writ large. Appirio has another take- they think Microsoft is poised better than most to take advantage of the cloud:
Probable Losers: SAP, Oracle, and IBM – Thousands of pages of corporate strategy analysis have been written at SAP, IBM, and Oracle on “the cloud” and what it could mean to their customers, yet none have articulated any cogent strategies about what to do. It ranges fromcomplexity and misdirection at SAP, to denial at Oracle, to attempts to freeze progress by IBM. But now, every prospect, customer, analyst, employee and partner will ask the big vendors to compare their cloud approach to Microsoft’s.
Much of the focus to date around Microsoft’s cloud strategy has been to frame it in competition to Google, but the bigger story is that Microsoft now has the ideal platform to effectively claim market share and attack $50 billion or more in revenue from their largest enterprise software competitors. Microsoft seems to have made the realization several years ago, as various initiatives coalesced around what has now become Windows Azure, that far from cannibalizing server software sales, public cloud computing subscription sales could drive net revenue growth. Microsoft’s leadership in this area is now clearly ahead of SAP, Oracle, and IBM. A clear target and a multi-year head start make a fundamental switch in the business model seems less risky.
Losers: The Big Legacy SIs – Accenture still may think the Tiger Woods fiasco was as bad as it gets, but Microsoft’s new direction could completely change the economic structure on top of which the global SIs have spent the last thirty years building their businesses. Even with Avanade – its joint venture with Microsoft – Accenture, along with IBM Global Services, EDS (now HP), and other legacy GSIs, face a future where cloud providers are delivering answers, at a much lower cost, to an ever-growing domain of IT problems that SIs have historically solved.
The hardware, operating systems, networks, databases, and application software that companies had to purchase, configure, maintain, upgrade and eventually replace, ad infinitum, are becoming the responsibility of the public cloud providers – now, significantly, including Microsoft. This macro-trend will impact virtually every segment of the hardware and software markets. But because personnel costs represent such a significant portion of the cost of IT operations, Microsoft’s cloud direction will drive huge costs out of enterprise IT largely at the expense of the global SIs.
One clear illustration of this phenomenon can be seen by comparing traditional IT outsourcing with “cloudsourcing.” Global SIs are good at traditional outsourcing because they have mastered the core competencies of managing server farms and operating complex single-instance enterprise software. But these competencies become irrelevant to companies looking to offload their IT operations to multi-tenant cloud providers. Customers now need new types of services that the global SIs not only have no experience delivering, they are actually strongly disincented economically from pursuing them aggressively, for fear of cannibalizing their existing revenue streams.
Don’t you think it’s interesting- the ex-Salesforce guys who’ve implemented some of the biggest Salesforce implementations (think Japan Post) and lots of Google Apps- including replacing Microsoft Exchange at Salesforce- are praising Microsoft’s strategy. It’s getting interesting.
The SI’s (and VAR’s) will need to transition, but they won’t be able to flog the same old technology led services- they’ll need to transition to adding business value.
In other news:
- Amazon EC2 is generating $220m revenue annually– Seems small to me???
- Eventbrite looks like it’s partnering with Facebook to monetize Facebook events
- Despite controversy- Kwedit, the “pay if you want to” monetisation service reveals a 26% repayment rate. Implications for SaaS? None yet… the future?
- iPhone OS 4.0 reported to have multitasking. Fed up of being beaten up by Android
- CA Acquires monitoring company Nimsoft for $350m- taking Cloud Monitoring very seriously. They bought 3tera last week, in addition to Cassatt, NetQoS and Oblicore. They’re getting serious.
- Salesforce CEO Marc Benioff answers his critics over the “facebookisation” of enterprise software
Have a great weekend.