For about five years now, I’ve been anticipating the rise of application and developer marketplaces. It baffles me that no one has perceived commercial opportunity in the massive inefficiencies in a customer’s ability to discover, procure and purchase apps or services for a given platform. I’ve done Q&A’s on the subject, I’ve used speaking engagements to evangelize the topic, and I’ve even articulated the pieces you might need and how most of them are available from Amazon. What has been the response to my business model for the 21st century?
Crickets, mostly.
Mobile’s an obvious exception. Once Apple built themselves a (massively successful) marketplace, vendors couldn’t build their own fast enough. And we’ve seen steps in the right direction here and there, such as the Eclipse marketplace or the Ubuntu Software Center. But the enterprise market has largely yawned at the concept of marketplaces,
But as of Tuesday, it would appear I finally have an answer to this question. The answer, at least for now, is Google.
As predicted by the Wall Street Journal last month, Google announced this week the immediate availability of what they call the Google Apps Marketplace. To explore what this means, let’s turn to the Q&A.
Q: Before we begin, do you have anything to disclose?
A: For once, not a ton. Some of the vendors who might be impacted by this announcement, such as IBM and Microsoft, are RedMonk customers, as are the mentioned Canonical and Eclipse, but Google is not a RedMonk customer, nor is Amazon. RedMonk, however, is a Google Apps customer.
Q: What is a marketplace?
A: There is no set definition, because it depends on the nature of the platform. But here are some rough stages of evolution for marketplace type offerings.
- The Repository:
An aggregation of applications, libraries, themes and other packages appropriate – and generally packaged for – a given platform. Optimally, installation is integrated as in the case of Linux distributions (apt, Portage, YaST, Yum, etc), but it may simply be a central portal collecting related assets, as is the case with WordPress. Users can browse, discover and (optionally) install free applications which will improve their platform, but the experience essentially ends there. - The Store:
The Store also aggregates platform related applications and packages, but introduces the commercial element. Paid applications are made available, and generally the purchasing process is integrated. The canonical example in this category is the iTunes Application store. Users can browse free and paid applications using the interface, acquiring/purchasing and installing either type. - The Marketplace:
The Marketplace – a true marketplace – includes all of the above, but adds one critical element: people. While Repositories or Stores make the process of acquiring and installing applications more efficient, they offer little to no benefit subsequent to that process. Need help with set up? Configuration? Tuning? Integration? You’re on your own: try Craigslist or eLance. A true Marketplace, however, adds the critical element of people to this equation, connecting customers to individuals or companies with related expertise.
Q: And you think Google’s built a true marketplace?
A: They appear to be pretty close, yes. It’s not quite a wide open marketplace for human resources yet; there don’t appear to be multiple individual implementers for the different software options, for example. But just look at the Small Business Implementation services: lots of small shops in there competing on pricing for implementation. And that single example illustrates to me why this is a good idea for everyone involved.
Q: How’s that?
A: Consider the small business market. Many SMBs are using ISP based email to run their business, which is why you email them at something like [email protected]. They’re doing this not necessarily because they believe it’s the best solution for their business, but because everything else is too hard. But what if you could tell them that they could have mail, calendaring, online documents and everything else that comes with Google Apps for around $20 or $30? How many would go for that? Quite a few, I’d bet, and I doubt Google would take that bet.
But the set up for Apps, which involves making changes to domain MX settings and such, is a little too much to ask from the kind of people that are trying to login to Facebook from Google.
For someone who’s experienced at it, however, the setup is trivial: about 30 seconds work. So you arbitrage the delta in difficulty and come up with a fair price (as determined by a competitive market), and everyone wins. The SMB gets a better infrastructure at a very reasonable cost, the implementer gets a decent margin on a few minutes worth of work. Google, meanwhile, gets a $100 per developer/org and customers that may or may not pay them but will provide them with more data in the meantime while not using a competitor’s solution. Everybody wins.
Q: But as popular as Gmail and Apps might be, isn’t their ecosystem dwarfed by that around products like Exchange?
A: Undoubtedly. And that’s one reason the Marketplace is so interesting.
How do you find solutions if you’re using Exchange? Where do you go? If you’re relatively knowledgable, you might think to visit the Exchange homepage and search for partners. Which might lead you here, to an uninspiring partner search page. If you keep hunting, you might wind up at Microsoft’s version of the Solution Marketplace. Perhaps from there I find a listing: what are my options at that point? Show a phone number, send an email inquiry. The pricing? Per seat, that’s all I’m told.
Contrast that with similar products from its Google counterpart, where the pricing is described, you can read actual reviews of the product or services and – most differentiating – you can click to install the product. The SaaS nature of Google Apps has its disadvantages, particularly for conservative buyers, but ease of installation is not one of them.
Q: The primary advantage of Google’s Marketplace then, vs something like Microsoft Exchange, is in product acqusition?
A: The advantages of a true marketplace as Google’s built it exist at every layer: inefficiencies are significantly reduced or eliminated in discovery, acqusition/implementation, purchase, and experiental ratings/context.
Q: So do you think that Google’s community is going to approach the size of Microsoft’s soon?
A: Rome wasn’t built in a day, and Google’s got a long way to go before it can rival the size and scope of competitive communities like Microsoft’s. That said, if I was competing with Microsoft, this is how I would do it.
Q: What didn’t Google get right?
A: It’s a little difficult to discover more general resources: I have questions or needs, say, around complex spreadsheets, or the construction of templates in Docs. It’s also vendor focused at the expense of individual practitioners. Nor is it obvious what the Google Qualifications mark is. And as far as the applications implementation experience goes, it can be a bit clunky: our TripIt installation is still hung up.
Q: What’s in it for developers?
A: Access to the market. Say you do Google Apps implementations; how do you do customer acquisition? Locally or regionally, you might employ traditional mechanisms such as print or radio, but it’s probably just as easy for you to set up apps for a customer in Auckland as it is next door. By listing yourself in the marketplace, you have the opportunity to access a wider and more targeted market than you would with, say, AdWords.
Q: What about the competition? Won’t it be difficult to be heard? How differentiated can you be as someone who sets up Apps, for instance?
A: That’s an excellent question, and the answer is we don’t yet know. It will be interesting to see how Google manages the volume of developers. They’re already acting to throttle participation with the one time $100 signup fee, which should keep out most of the drive-by, non-serious implementers.
But whether they manage the volume tightly or loosely, this will be an important channel, simply by virtue of the volume that apps can generate.
Q: What about the applications space? Is it in a provider’s best interest to list with Google?
A: Why wouldn’t you? Google’s claiming that 2M businesses have already chosen Apps as their platform, and even if that assessment is inflated by 50% you’re still talking about a sizable market. Even better, a sizable market that is likely underpenetrated relative to more traditional marketplaces.
Q: Underpenetrated how?
A: The businesses running on top of platforms from IBM or Microsoft have had years, decades in some cases, to build up solutions around Notes or Exchange. Google Apps, on the other hand, is a relative greenfield simply because the integration of applications on the server side is new. It’s kind of a gold rush, in that respect.
Q: Big picture, what does all of this mean?
A: Let’s look at it by audience. For the customer, it means either a streamlined route to implementing Google Apps, an exponentially more accessible portfolio of resources once you get there, or both. For developers or application providers, it’s a relatively less crowded channel opportunity, one where the infrastructure for both installation and payment is already built for you. And for Google, it’s nothing less than an opportunity to dramatically expand their ecosystem, which – in addition to the obvious direct benefits in terms of customer acquisition and partner opportunities – acts to reassure conservative enterprise buyers that this platform is for real.
Q: And for competitors?
A: It means that they should have been building marketplaces all along, as I’ve been saying 😉
