Salesforce.coms Apex: Software Incubator or Company Store?

Opinion: Salesforce.com's Apex programming platform is making it less costly for developers to launch application software startups. But they may discover they are also giving up any chance for real independence.

SAN FRANCISCO—Salesforce.com is promoting its new Apex application development platform as a business incubator that will free startup software companies from the financial and management burden of having to first build up its own data center infrastructure.

The company claims that the Apex on-demand programming platform and language will give entrepreneurs and developers an opportunity to create "the next Salesforce.com."

The startups certainly have a lofty example to follow, since Salesforce.com has built up its on-demand customer relationship management service to the point where it is claiming well over 500,000 paid subscribers. In 2005 Salesforce.com branched out by introducing AppExchange, which gave third-party developers an online marketplace for add-on applications that run on the Salesforce.com platform.

Released Jan. 16 as part of the Winter 07 release of the Salesforce.com package, Apex provides Web services APIs, real-time messaging and application integration, and the Apex programming language code to allow developers to start building applications that are integrated with the Salesforce.com infrastructure.

The Apex language was released as an early developer preview, and Salesforce.com plans to release an Apex beta to customers "later in 2007."

With Apex, developers create entirely new application software startups without the huge up-front expense of assembling the myriad system components and services—such as databases, storage and security systems—that support their business applications.

Instead, developers can focus on designing an entirely new application designed to serve an innovative business model.

But it will be interesting to see whether Apex eventually serves as the incubator for a "new Salesforce.com" with a financial run rate of $500 million a year.

Click here to read about the introduction of the Apex platform in October 2006.

In some cases it might be the technological equivalent of the old company store, in which the customers are so locked into the resources that Salesforce.com provides that they will never be able to spin off into a prosperous independence.

Many small ISVs would be content to build a modest application business that generates perhaps $500,000 to $5 million a year in revenue. Some might gradually grow into businesses generating $10 million or $20 million in revenue. For these companies, relying on Salesforce.coms data center and back-office infrastructure makes sense.

But how likely is it that Salesforce.com will be the nest that allows robust $50 million—or $100 million—software companies to fledge? Is it really in Salesforce.coms interest to allow such large organizations to grow on its platform unless it also manages to take a generous financial interest in them as well?

Next Page: Crowding the nest.