How Google’s New App Store Impacts Microsoft, Amazon, and Startups
Google announced last night that it has officially opened an online store for outside developers to sell their business software applications. The Google Apps Marketplace offers cloud-based software that is integrated with Google Apps—things like Google Calendar, Google Docs, and Gmail for businesses. (That might be a record for the number of Googles in one sentence.) Developers will give Google (NASDAQ: GOOG) a 20 percent cut of each app sale, on top of paying a one-time, upfront fee of $100.
The move is widely viewed as an effort by Google to compete more strongly with the core business software sold by Microsoft (NASDAQ: MSFT). The announcement happens to come just a few days after Microsoft CEO Steve Ballmer laid out his company’s plans for cloud-based software in a sweeping talk at the University of Washington. It also comes on the heels of Google’s acquisition of DocVerse, a collaborative software startup whose technology could help connect Google Docs with Microsoft Office.
And what about Amazon’s cloud computing platform? Thousands of startup developers use Amazon Web Services (AWS) to store data, and to host and manage their applications. But Google’s new app store doesn’t stop any developer from also using AWS. Rather, developers can still use AWS for back-end IT services and now market their software through Google Apps. Amazon (NASDAQ: AMZN) itself doesn’t have a business-app marketplace, though it is rolling out mobile “active content” for consumers in its Kindle store later this year.
In fact, Google and Amazon both provide cloud “infrastructure”—software platforms for developers and companies to use as much or as little cloud-computing resources as they want, without the expense and hassle of maintaining their own servers. Microsoft’s cloud platform, Azure, is getting in this game as well, but it’s not entirely clear how much Microsoft intends to tie developers into its cloud products. Microsoft’s core business thinking is rooted in proprietary desktop-based software and distribution partners—which isn’t a bad model, but how well it transfers to the Web developer ecosystem remains to be seen.
Bottom line: tech startups can now use a hybrid of Amazon and Google cloud services to develop, host, and market their software. This could potentially unseat Microsoft as the king of business software—but it’s still early in the game. (Though surely Oracle, IBM, and SAP are paying close attention too.)
Meanwhile, there are 50-some apps already available in Google’s app store. Among them are products from at least three Seattle-area companies that we follow regularly:
—Concur, a Redmond, WA-based maker of corporate travel and expense management software, is offering an expense-reporting service for small businesses through the Google store. Elena Donio, executive vice president and general manager of emerging business at Concur (NASDAQ: CNQR), says the company’s technology is used by 10,000 companies and millions of employees around the world. Meanwhile, CEO Steve Singh recently joined Seattle-based Voyager Capital’s advisory board, so he is well-connected to the startup scene and is sure to hear what developers like and dislike about the new Google store.
—Skytap, a Seattle cloud-computing startup, is selling its service that helps companies manage their data, processing, and networking online (in the cloud), using their existing enterprise applications. Skytap as a Google App is particularly interesting because it is actually providing cloud infrastructure to small and medium-size businesses that could become a viable competitor to the offerings from Amazon, Google, and Microsoft.
—Smartsheet, a Bellevue, WA-based startup focused on software to help workers better collaborate and manage projects, is marketing its application alongside Google’s spreadsheet. So businesses can track things like sales pipelines, marketing events, and IT projects in one unified spreadsheet-like layout. Executive chairman and co-founder Brent Frei says it’s a “pretty momentous occasion” for Smartsheet, and that Google’s new marketplace “amps up their drag race with Microsoft in the business apps space.”
For all the other tech startups out there, Frei offered his early reviews of how Google is doing with its online app store.
He says Smartsheet needed a big distribution channel where it could be “visible and competitive,” and where the distributor would be “helpful and responsive.” Google provides all that, he says. What’s more, Frei says Smartsheet chose to integrate with Google Apps in part because it has lots of users—25 million people at 2 million companies—and because “their marketplace is new and relatively uncluttered.” That means his company doesn’t “have to compete with 30 other vendors in the same category.” (As compared to the 800 or so existing business apps in Salesforce.com’s AppExchange, for example.)
“There’s nearly always an advantage to being part of a market leader’s launch of something new and important,” Frei says. “They need the vendors participating with them to be successful as validation to others to join in.”
Interestingly, Frei once told me that he wanted to create “the Google for team-task management.” He seems a little closer to achieving that goal today.
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