First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.
To woo partners, cloud computing vendors show them the money
- — 28 August, 2009 05:13
One of the early promises of software-as-a-service and cloud computing was that it would allow startups to directly market their Web services while skipping the expensive, lengthy process of creating an ecosystem of partners and resellers.
"Building the channel" was an antiquated strategy, they argued, a legacy of on-premise dinosaurs such as Oracle Corp. and Microsoft Corp.
Cloud providers thought, "we can directly reach these people, so we don't need to invest in other channels outside of our brand," said Tiffani Bova, an analyst with Gartner Inc.
But with cloud computing still more hype than actual deployments, vendors slowly began to accept that "a single sales strategy will only get you so far," Bova said.
That has resulted in three out of the four largest cloud computing vendors taking major steps in recent months to attract partners to help them market and sell their respective services.
Last month, Microsoft announced prices for its coming Windows Azure platform-as-a-service (PaaS), including a 5% discount off consumption pricing for Microsoft's 400,000 global partners, and a half-year discount of 15% to 30% off consumption prices (For example, per megabyte stored per month) for those signing a minimum six-month contract, plus two as-yet-undetailed subscription plans for partners.
A month earlier, Google Inc. had announced that resellers of its Google Apps productivity suite would get a 20% discount off list price, as well as retain the desirable middleman role with customers.
The most recent move was by Salesforce.com Inc., which on Wednesday introduced a new program to attract value-added resellers (VARs).
The highlight is that VARs will be able to obtain Force.com for as little as $7.50 per user per month. That is 70% off the list price of $25 per month for each end user.
Partners such as Adam Caplan, CEO of Model Metrics, a Chicago Web development firm, said Salesforce.com's plan is very financially attractive.
"We can get real margin on recurring revenue, which is a beautiful thing," he said. Moreover, Salesforce's VAR program encourages, not forbids, Model Metrics to resell Force.com to the 500 customers it shares today with Salesforce.com, he said.
Salesforce takes lead in winning developers
Force.com partners are also allowed to participate for free in the company's AppExchange, an eBay-like marketplace for cloud apps. There are 800 apps available today on AppExchange. A more impressive 120,000 apps have been built and run via Force.com.
Competition for partners is heating up as developers start to move en masse to the cloud. According to a survey published in August by Evans Data, nearly half of developers expect to deploy apps to a private cloud within a year.
Even before its VAR program, Salesforce.com had the biggest lead in winning developers, according to Rebecca Wettemann, an analyst with Nucleus Research, because it provided tools that made it an average of five times faster to build software on Force.com than on Java or .Net.
"Anyone can build a data center. What Salesforce.com has done is package an entire test and product environment and now with sales and marketing support," she said.
"The beauty of Force.com is that development is easy," Caplan said. "It's clicks, not code."
It's unclear, however, how much that has yet to translate into real profits for Salesforce.com. During its second-quarter earnings call last week, the company said that "25% of its business" that quarter came outside of its core CRM-on-demand business, in ventures including Force.com.
By contrast, the company that has done the least to woo developers and resellers appears to be doing the best, financially.
Amazon Web Services, according to figures released in July by Amazon.com during its quarterly results, appears to comprise the biggest chunk of a category that is already a $550-million-a-year business.
That's despite Amazon not offering any preferred discount to partners, nor providing much technical handholding, Caplan said. "It takes a lot more technical skill to use AWS," Caplan said.
That didn't stop Model Metrics from reselling both AWS and Force.com to customers. For one, AWS' prices are "dirt cheap," he said. It's also a "more developed platform" than Google App Engine, and thus complementary with Force.com.
Microsoft: The big question
The biggest wildcard is Microsoft, which had long insisted that cloud services alone would not be enough to displace its on-premise dominance.
The shift by most cloud providers toward a partner-centric model pulls them closer to Microsoft's home turf, where the software maker has "the money, the size and the power," Bova said. Ninety-five percent of Microsoft's $60 billion in annual revenue comes from its 400,000-strong partner army, she said.
The 14,000 members in Microsoft's elite Gold partner program alone are more "than Google, Amazon.com and Salesforce.com have combined," Bova said.
But mobilizing these partners to tout Azure and Microsoft's other cloud services, such as its Business Productivity Online Suite, is no slam dunk.
For one, Azure, due to launch in November, remains "PowerPoint-ware," Wettemann said. Also, many of these partners are small "mom 'n pop" shops who may prefer to cling onto existing business models, she said.
And there's no guarantee that partners who switch to selling Microsoft's cloud wares will do anything but substitute Microsoft' existing on-premise software revenue.
That's not true for cloud-only players such as Salesforce.com, Google and Amazon.com.
Bova, meanwhile, says that Microsoft hasn't shown an ability to be as nimble as other cloud players. Google, for instance, "has made some very quick decisions that a larger organization [like Microsoft] can't," she said.