In the flickering yellow-orange glow of fake campfires and under a dark blue canopy of branch-like shadows, Google (GOOG) announced a new product Tuesday evening that heats up its rivalry with Microsoft (MSFT) -- as well as the market for a new group of Internet-based enterprise-software startups.
The Google Apps Marketplace, launched at a semiannual Google Campfire One event in Mountain View, California, will allow developers to sell software applications to the more than 2 million businesses already using Google Apps such as Gmail, Google Docs, Google Calendar and Google Sites.
The idea is that developer partners will be able to create apps however they want, access data from other apps – for example, add events to Google Calendar or tap into users' contact lists – with users' permission and integrate their apps into the Google Apps control bar and navigation bar. Meanwhile, businesses that use Google Apps will get access to far more of the applications that are then integrated into the same Google Apps interface and that all work together.
The move takes Google deeper into the Internet-based, or "cloud-based," enterprise market, where it already competes with Microsoft's cloud-computing enterprise services and Microsoft Office. It also makes it easier for new startups to target the enterprise market, which industry insiders say could lead to an explosion of new companies and products.
Startups Sign Up
Among the 50 partners that already signed up by Tuesday evening launch are:
Box.net: Founded in 2005, this company has developed a content management app that can share all kinds of files, including Google Docs, images, Adobe Illustrator files and more, in Web-based work spaces, as well as control access to the files and assign related tasks. Box.net, which has raised $17.1 million from investors such as Draper Fisher Jurvetson and US Venture Partners, boasts more than 3 million users so far.
Skytap: Founded in 2006, this Seattle-based startup gives its customers Web access to business software that's normally stored on a local computer or server, such as Lotus Notes, Microsoft Exchange and SAP's ERP (enterprise resource planning) software. Skytap claims its virtual servers offer its more than 100 customers 50 to 70 percent savings in infrastructure costs, and also enables customers to run Lotus Notes and other business apps inside of Google Sites.
Atlassian: This 7-year-old Sydney-based company has signed up its 2-year-old software development suite, called JIRA Studio, which integrates a set of software development tools, including source tracking, source code search and code review, as well as Google Apps and Microsoft Office, into one interface. Atlassian already provides tools to more than 17,000 developers, and Michael Knighten, director of hosted services at the company, says it made sense to partner with Google because software developers are early adopters of Google Apps.
SlideRocket: Founded in 2007, this San Francisco-based company has developed a presentation app meant to compete with PowerPoint. The app, which launched in 2008, enables users to include data from various Web sources, including Google spreadsheets and contacts, and allows multiple users to make changes to the slides at the same time. Just like with Google Docs, no matter how many people are viewing the presentation, the changes will show up on all of them at the same time, eliminating version-control issues, claims CEO Chuck Dietrich. If someone changes a logo in the asset library, that change will occur in every slide in which the logo appears, he added. The software also provides statistics about slide viewership and more interactivity, so that slides might be presented in a different order – or slides might be skipped -- depending on viewer interests. The company already has more than 1,300 customers, including South by Southwest, which starts this week.
More Enterprise-App Startups On The Way
Many customers want email and scheduling applications, and the ability to offer customers already-successful Google apps like Email and Calendar, instead of developing those apps themselves, means startups can get products out faster, Raghavan says. "Email is not something we need to do," he adds.
As Manav Monga, founder of task management app Manymoon, put it: "You want to concentrate on what you're good at and leave the rest to Google."
The marketplace also gives startups a distribution channel to small and mid-sized businesses that might be harder to find and target on their own, and that already are using cloud-based computing, Raghavan says.
Of course, by lowering the barriers to entry, the move will also heat up competition for companies already on the market. "Google's made it very easy, so you're going to see a ton of people taking advantage of that," Tencza says.
Upping the Ante Against Microsoft
Expanding the apps available to businesses also could make it much more viable for Google to compete with Microsoft, experts say. "Google Apps has done really well with Email and Calendar, but it hasn't yet been able to say, 'Throw out your servers; you can do it all with Google Apps,' until now," says Jen Grant, vice president of marketing for Box.net. "This makes [Google] hugely competitive with Microsoft."
Of course, the degree of competition will depend on whether Google can attract apps that business customers really want. Microsoft already has a huge enterprise-customer base, making it a tough competitor. If the apps ultimately developed on Google's platform aren't as good as Microsoft's business products -- or if it proves too difficult or time-consuming for customers to find and use the best apps -- Google may not gain market share.
The apps likely to do best in the Google marketplace will solve a user problem and eliminate clicks, says David Glazer, an engineering director at Google. Developers should think "what would I want to do in my inbox, in my calendar?" he says. "If you find a flow that starts with someone getting an email message and that requires 50 clicks, and if you can now make it a five-click flow, that makes someone's life better."
While the fastest-growing segment of Google enterprise customers has been Fortune 1,000 companies, he says, the first users of the marketplace are likely to be younger companies and colleges, which also ranked among the earliest adopters of Google Apps.