Salesforce.com announced Dec. 12 its strategy and vision for AppStore, the monetization of the AppExchange marketplace that the company plans to release in a phased rollout throughout 2007.
"This is really about us announcing a vision for AppStore and how partners can work with us, and then we work with customers and partners to work through the details," said Ariel Kelman, director of Apex platform product marketing at Salesforce.com. "Were announcing [AppStore] as a strategy, then working on building something over the next year."
The idea is that with the addition of AppStore, Salesforce.com users will be able to "try, buy and deploy" from a single environment. In the past, users have been able to shop around AppExchange for different ideas, then download and "test-drive" third-party applications. But theyve had to go directly to that AppExchange partner to actually buy the application. With AppStore, the buying experience will become seamless (or so the theory goes) within AppExchange.
On the developer and ISV front, AppStore is really a means to outsource application sales to Salesforce.com. Salesforce will offer marketing and referral services, as well as a revenue-sharing program to help AppExchange partners sell their wares.
The concept is one that pleases Vlad Voskresensky, CEO of InvisibleCRM.
"The AppExchange was kind of a boutique store where you just introduced your software and kept track of selling it," said Voskresensky, who sells all of his software through AppExchange. "With AppStore, [AppExchange] becomes like a Wal-Mart for us. Its a real store of the software world. But with AppStore you outsource all of this—you dont track selling, invoicing, etc. You keep a focus on development work. Theres a tremendous amount of work we dont have to focus on."
The service, for AppExchange partners, wont come cheap. And fees break into several categories. For co-marketing services, available in February 2007, charges will run between 10 and 25 percent of the first year of revenue, based on the leads generated with AppExchange and the level of service provided.
The e-commerce services, dubbed AppStore Checkout, will include online ordering, billing, invoicing and collection services, which include the option for customers to add their third-party billing to an existing Salesforce contract. Salesforce will charge partners a 20 percent commission on all amounts invoiced on an ongoing basis.
The e-commerce engine is expected to be available in about a year.
Voskresensky, in San Mateo, Calif., is not put off by revenue sharing. Hes sold $10,000 worth of software through AppExchange since October (half the companys sales) and believes that number will continue to rise as Salesforce takes on the marketing of his products.
"Its the idea we had when we first started selling [our software], to share revenue with Salesforce itself," he said. "But it was not possible then. They did not sell, which meant you had to penetrate the market yourself. If Salesforce will in effect sell our software, I really expect a big change next year."
"For customers, AppStore will make purchasing on-demand applications as easy as buying music on iTunes, and for partners, AppStore will remove the burden and expense of building out a sales and distribution channel," said Marc Benioff, chairman and CEO of Salesforce.com, in San Francisco. "From the moment we started talking about our vision of a marketplace of on-demand applications, the market has been asking, What is Salesforce.coms strategy to monetize the AppExchange? AppStore is the answer."
This is not the first bit of news about AppStore. Benioff began talking about an e-commerce engine in development at the companys annual DreamForce user conference in October. At that time he introduced Apex, Saleforce.coms programming language for on-demand software.
It should be noted that ISVs and developers who utilize AppExchange must develop their applications using the Apex tools and development platform. So while ISVs and developers may find an extra on-demand marketing and accounting division through AppStore, they are also tying their boat to Salesforce.coms for the duration.
Since its inception last year, more than 7,400 customers have deployed over 20,000 applications through AppExchange. Salesforce.com does not, however, break out which of those deployments are free downloads and which are paid-for software. Currently, AppExchange has about 430 applications from 230 partners listed on its marketplace.