Google Apps Marketplace: Good start, long road ahead

At its six-month anniversary, the Marketplace is progressing, but Google is aiming much higher

Six months after launching its Google Apps Marketplace, Google is pleased with the project's progress but acknowledges it has much bigger expectations.

The number of available applications has grown from the initial 50 to 200, and companies with a total of 4 million Google Apps users have bought software from the Marketplace.

While encouraged, Google isn't close to realizing its ultimate vision. "If you look at our goal, it's lofty: to get all the best business cloud apps to work with us and be in the Marketplace," said Scott McMullan, Google Apps partner lead.

Introduced in March, the Apps Marketplace is more than an e-commerce storefront. Through a series of APIs, third-party applications can be integrated in a variety of ways with the Google Apps suite, including having a single sign-on and fused UI navigation.

As such, the Apps Marketplace is intended to surround Google Apps with as broad a universe as possible of complementary cloud-hosted software for businesses.That way, Google Apps customers can extend the suite's functionality with external applications for things like CRM (customer relationship management), accounting and project management that have gone through an integration process with the Google collaboration and communication suite.

"We want to make it easy to go to the Marketplace and get anything you need to run your business in the cloud," McMullan said in a phone interview.

The idea is sound, but the progress metrics don't seem earth-shattering at this point, especially when compared with similar projects from other vendors, said IDC analyst Al Hilwa.

"If you look at the pace at which [Salesforce's] Force.com accumulated customers, I would say that Google has definitely not outstripped it by leaps and bounds," Hilwa said via e-mail.

Google stands to benefit from the progressive acceptance and adoption of the platform-as-a-service model, he said. "We are still in the early stages but I would expect the [Google Apps] marketplace to pick up the pace a bit over the next couple of years as more companies begin to turn to the cloud," Hilwa said.

However, Google also needs to help its cause through continued enhancement of the Apps Marketplace platform. "The challenge here is for Google to offer a solid enough and flexible set of APIs that allows ISVs to invest in these offerings further," Hilwa said. "A development platform has to be both simple and powerful, which are always difficult to keep together in an offering."

Google is actively in talks with software vendors that have expressed interest in participating in the Marketplace but haven't gotten around to working on the integration, McMullan said.

The company also recognizes that some potential partners won't be drawn in until Google Apps gains certain new features or until Google exposes additional APIs for Marketplace applications to integrate with the suite, he said.

"As we bring new things into the suite, that opens up new meaningful integration possibilities to provide a good user experience and attracts new types of vendors," he said.

Google has been very encouraged by the about 30 vendors who have developed applications using a new API unveiled in May that allows for the creation of "contextual gadgets" that let third-party applications display relevant data within the Gmail interface, he said.

A priority now is to replicate that enthusiasm in other Apps components. "There are more areas of the platform, particularly the Docs area, that we think are all very valuable use cases that need additional APIs to make them work. We'll definitely continue to invest there," he said.

For now, SmartSheet, maker of a hosted project management application, has found great value in the Apps Marketplace, said its CEO Brent Frei.

"The lead flow is stronger than expected and has continued to grow larger. The Google Apps customers tend to buy more expensive product plans. As we've taken advantage of new integration features within Google Apps -- like contextual Gmail gadgets in May -- and tightened up existing ones, conversion rates to paid customers have continued to rise," he said via e-mail.

Integrating the SmartSheet software with Google Apps proved easier than expected, and the scope of the possible technical links was broader than with other platforms, Frei said.

SmartSheet has taken advantage of these deep integration capabilities, adopting not only the single sign-on but also integrated UI navigation, data exchange with Google Spreadsheets and contacts synchronization, among others.

A concern for SmartSheet is to remain "above the noise" as the number of applications in the Marketplace grows, he said. It's critical for Google to be selective and make sure that the quality of Marketplace applications remains high across the board, Frei said.

"It's in all our best interests if customers routinely find great solutions in the Marketplace to the problem they are trying to solve for. That means that they'll likely look in the Marketplace when needing our category of solution as well," he said. "If they install and try a few vendors and don't find the solutions useful or professional, then they're not likely to come back for other needs."

Early on, a few new vendors gamed the review ranking system in the Marketplace, but Google stamped out the problem once it became aware of it, Frei said.

"The responsiveness of the Google Apps [development] team has been exceptional. Our experience is that they respond more like a hungry startup trying to make their partners successful, than a global giant with lots of leverage," he said.

For now, Google is letting Marketplace vendors keep 100 percent of the proceeds from their sales, because the e-commerce APIs aren't yet ready. Eventually, Google will take a 20 percent commission.

At this point, Hilwa doesn't foresee Google rushing to start charging that commission. "The investment for ISVs to go on the cloud are significant and 20 percent probably eats whatever profit there is," he said. "I expect it to stay at zero for a long time. Likely 20 percent may prove a bit high in the long run as the competition heats up in this space."

McMullan said Google is aware that the Marketplace has to offer a clear value to all involved: "We launched this very explicitly with the goal of making this a good ROI," he said.

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Juan Carlos Perez

IDG News Service
Topics: applications, e-commerce, e-mail, software, internet, cloud computing, Software as a service, collaboration, Google Apps, google apps marketplace, Google
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