Commentary

Why Retooling Google Solutions Marketplace Would Spur Third-Party App Sales

If Google makes a move to revisit and possibly redesign Google Solution Marketplace to support third-party business applications through download or cloud computing, it shouldn't surprise anyone. A redesigned site should represent the next step in Google's strategy to promote its own enterprise apps and those of its business partners.

The move has likely been on the drawing board for the better part of a year, as I think back on my visit to Google's Manhattan headquarters and talks I had with a few Google employees.

Google's Docs, from email to spreadsheets, have failed to adequately compete with Microsoft, which leads in these types of software applications. Google has also failed to compete with business tool exchanges, such as Salesforce AppExchange.

As for the timing of any redesign: "The Google Solutions Marketplace makes it easy for our customers to connect with an ecosystem of products and professional services," says a Google spokesperson. "We're constantly working with our partners to deliver more solutions to businesses, but we have nothing to announce at this time."

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Trip Chowdhry, managing director for equity research at Global Equities Research, believes strengthening Google's footprint in the enterprise space takes the company to its next expansion phase. He points to businesses that have already created a need for this type of marketplace, such as the council for the city of Los Angeles, which approved a more than $7 million deal to use Google's applications for its more than 30,000 personnel.

Aside from allowing people to discover new applications, a revamped Marketplace would generate revenue through Google Checkout and provide third-party developers a stronger distribution channel supported by Google development tools. "About 70% would go to the app developer, and Google would keep the rest," Chowdhry says. "I think it will take between 12 and 18 months before we'll see significant gains, financially," but before that we should see the mentality of people looking for business apps shift toward Google, he says.

Agreeing the move could benefit Google in the long term, Steve Weinstein, senior research analyst at equity firm Pacific Crest Securities, says Google has been actively promoting the apps business to get more people in the cloud. To make all the world's information accessible, Google needs to get people to access cloud computing, he says.

Speculation that Google would launch an online marketplace for business applications tied to its Web services first surfaced this week in The Wall Street Journal, but as those close to Google point out, a Google portal that serves as an online connection to third-party developers already exists. Through this portal people using Google applications can discover and find add-ons, tools and support.

The revised version of its online apps marketplace could provide a trading platform for partners to find and deliver applications, services and solutions. Perhaps the applications would not only support the PC and tablet users, but mobile phones running Android, too.

Google Apps provides Web-based email, word-processing and spreadsheet applications, but would add business software designed by third-party developers to integrate enhanced security features and import functions.

The Marketplace would become a place where buyers and sellers could go to upload or download apps from a database either supported by cloud computing or from third-party developers' Web sites. For each sale through Google Checkout, the search engine would get a percentage of the sale by sharing the revenue with software developers.

Google introduced an authorized reseller program last year aimed at marketing third-party applications and cloud computing.

The Google Marketplace would combine the basic Google DoubleClick Ad Exchange concept, which connects buyers and sellers, with a model that supports eBay for business users, and the Salesforce AppExchange, an on-demand applications marketplace in the clouds.

Cloud computing geared toward enterprise applications isn't new. The concept first emerged as time-sharing apps in the 1960s, when companies rented hardware and software computing resources because they lacked the money and expertise to run applications internally. Among those to first offer such services were IBM and General Electric. Then application-service providers (ASP) emerged in the late 1990s. The business model for both approaches failed, giving rise to the next iteration of hosted applications and then cloud computing.

Google Solutions Marketplace

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