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January 24, 2006

AppExchange is new killer app

Continuing its worldwide AppExchange and Winter 06 launch, Inc was in the UK yesterday with its message that AppExchange marks the move to the next stage of on-demand computing, dubbed the business web, and is its next killer application.

By CBR Staff Writer

This is the term uses to describe its vision of a network of on-demand applications, services, components, and development work that will enable business to run their entire business under the on-demand model. Just as browser technology and web sites like Amazon, Google, and Yahoo have empowered the internet and changed the way consumers operate, the concept of the business web will do the same for the business world, according to CEO Marc Benioff. If you have that level of consumer level engagement and automation, why not have it at the business level too? he said.

As the company continues its transition from CRM application service provider to a platform provider, AppExchange is set to be the engine of change. AppExchange is the biggest idea we have worked on. The Business Web needs a platform to create and build applications, to build applications and push them to a directory, to consume, run and integrate. Integration is not just [achieved] through APIs and programming but by mashing up. The AppExchange creates the platform to empower and enable the Business Web, said Benioff.

John Freeland, president of worldwide operations, said: We viewed the original applications at the first killer application. This is the second killer application. There is huge growth left in the CRM applications and this is the next wave of growth. It will take our relevance within our customers to the next level.

On one level, the AppExchange approach, which puts at the center of an ecosystem of partners developing vertical market functionality and extensions to its core application, is similar to the partner-centric business applications strategies of Microsoft, SAP, and Oracle. The difference is that where they build licensed, on-premise software for a specific application, AppExchange is based on the idea of a flexible service. Benioff has always stressed that the on-demand concept democratized applications for users and believes that AppExchange will also democratize software development and distribution for the developer community because of its ability to provide the development environment, tools, and application server and distribution as a service.

A lot is riding on its success, and according to Freeland, one of AppExchange’s many roles is to accelerate’s progress into large enterprises. It is as much a concept as an entity, and Benioff said he expects multiple AppExchange’s to be built, created by partners or by customers who could use them behind their firewalls to run their own applications. launched a Japanese AppExchange yesterday. In theory, AppExchange’s would connect in to the environment through an API, just as some of application extensions do today.

There are several uncertainties, however. The company is focused on building momentum for AppExchange so the pricing model is still emerging. It is premature to think about the pricing model. We do not know enough about it to know what financial model it will take, said Freeland. As we get acceptance and a large base of customers we will know.

There is also the quality-control issue. Although certifies some applications, it will not be feasible to certify them all, especially if its dream of high-volume democratic development comes true. Freeland said that ultimately customers will determine quality levels via their patterns of usage or through eBay-like rating systems. Managing the channel is also an issue. It is still early days. We are still incubating the business model, the support, scaling the development team, certifying and [building] the alliance management team. Ultimately the issue of quality relates to us and our brand so we take it seriously, he said.

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