Web 3.0: Salesforce.com's 'Business Web'

Salesforce.com CEO Marc Benioff is hitting all the right notes as its AppExchange platform gathers the momentum it needs to become the 800lb gorilla of on-demand.

Some people call it the 'enterprise Web.' Here, I've been calling it Web 3.0. Marc Benioff, launching Salesforce.com's Winter '06 release and AppExchange platform today, calls it 'the business Web,' so I guess that's the name the majority of people will settle on. But will his company dominate it? Let's take a deeper look.

I was mightily impressed by Marc's presentation today.AppExchange could become the 800lb gorilla of on-demand He's done a great job of translating current trends in on-demand and Web computing  into digestible soundbites. Instead of 'application integration' the new phrase is 'enterprise mashups'. 'Application development' becomes 'social production'. And 'service reuse' is simply 'downloading from AppExchange'.

When he came out and said, "Creating and using applications should be as easy as creating and using blogs," I silently mouthed "Yesssss!" That is right on the nail, in my view, even if some might feel it's a bit radical.

The AppExchange ecosystem is not only getting the language right, it's gathering gorilla-class momentum, too. Benioff introduced some heavyweight partnersAdobe, with an on-demand PDF creation service (I'm wondering what the price tag is on that, if it's not going to cannibalize Acrobat licence sales?); and Business Objects with a hosted Crystal Reports writer that creates reports and charts on the fly from live Salesforce.com data and other AppExchange data sources.

Meanwhile, existing partners are doing well, too. DreamFactory's DreamTeam, which its CTO Bill Appleton described to me last October as the "killer app" for AppExchange (see AJAX and the richer Internet application), has already signed up 30 paying customers and has another 100 in its pipeline, Benioff revealed today.

Showing the appeal of the platform across the spectrum, there's even an AppExchange application launched today that's been designed by students. "I am by no means an expert," says Ed Schlesinger, the creator of studentforce, a customizable tool that helps students manage their time and plan their studies. "I am a non-technical salesforce.com user who has been able to develop what many think is a functional tool for students."

Benioff talked today about democratizing the development and distribution of software. Here's what Schlesinger wrote to me on that score in an email last month to introduce me to his application:

"Before the AppExchange I would have had to attract investors, hire technical experts, and purchase marketing and advertising services — all well beyond my resources.  With the AppExchange I can introduce my product on a level playing field and attract interest across the spectrum."

This breadth of appeal lends momentum to AppExchange at every level — endorsement by mainstream vendors, customer traction for mid-tier partners and mass-market developer appeal. That's why I used the gorilla analogy earlier on. If it gets enough adoption, it could dominate by sheer force of numbers. Once a platform becomes the 800lb gorilla of its market, customers need a lot of persuading to make any other choice. AppExchange could become the 800lb gorilla of on-demand.

Having bought in to AppExchange, customers will find it difficult to switch out again. As I mentioned in my posting last week about Enterprise mashups: a lesson from history, there are no standards for integrating applications at the user level. By getting vendors to standardize on the Salesforce.com user interface, AppExchange is making an outright grab for the lucrative application-layer high ground of the Web 3.0 landscape that I outlined in an earlier posting. Becoming the dominant player of that layer would put Salesforce.com in a position of strength to dictate pricing (and thus its own profit margins).

One thing that could go against AppExchange achieving this position is that its terms are less favorable to partners than, say, NetSuite's ecosystem strategy, which I described earlier today. NetSuite offers resellers a more generous deal and gives ISVs more autonomy to choose how they integrate their solutions with its NetFlex platform. And as its CEO argues, the transactional data held in the NetSuite engine makes a better pivot point for many business applications than Salesforce.com's data. But then that could be resolved by using NetSuite as a back-end to AppExchange applications (something that in theory is already possible though I doubt anyone's tried it yet).

On the other hand, AppExchange has one trump card that may yet prove its most persuasive asset. It is quite simply a superb environment for discovering available applications and services. Discovery is one of the four pillars named by influential CIO JP Rangaswami as the future of enterprise applications. So maybe service discovery will prove to be the killer app for AppExchange, in which case Salesforce.com will no longer have to rely on salesforce automation or customer services as its core applications (although it would then have to change its name and stock ticker).

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