Part 1 of this two-part series on five of the boldest decisions made by technology companies this year explores the launch of Hulu and Amazon.com’s decision to go DRM-free with its Amazon MP3 store.
Now, for the three remaining genius strokes in the E-Commerce Times’ lineup of bold decisions that changed the technology landscape in 2008:
- Salesforce.com’s launch of its Force.com platform, the customer relationship management company’s first foray into cloud computing. Force.com offers a group of tools that enable customers to build an entire platform of business applications — hosted on Salesforce.com servers — such as human resources and supply chain management applications.
- Google’s launch of the Android mobile platform, an open source architecture that allows outside developers to create mobile applications for Android-based devices such as T-Mobile’s G1 phone.
- Apple’s launch of the iPhone App Store, an online market where iPhone owners can go to download mobile applications, just as iPod and MP3 device owners can go to the iTunes store to download digital music files.
Salesforce.com Jumps Into the Cloud
Back in the early 2000s, the Software as a Service, or SaaS, model was largely unproven and seen as an end-run around traditional enterprise software installations, according to Ariel Kelman, senior director of platform marketing at Salesforce.com.
“Salesforce has changed that to the point that IT organizations are asking how they can best leverage [SaaS] to be faster and more competitive,” Kelman told the E-Commerce Times.
Decision makers at Salesforce.com felt it was time to launch a new platform that could support myriad business applications, some developed by the company’s software engineers and some by outside developers.
“We wanted to propagate the Salesforce.com idea of Software as a Service to all business applications,” Kelman said.
For several months before Force.com’s launch in the spring of 2007, Salesforce.com encouraged developers in IT departments among its 50,000-strong customer base to develop new business applications that could run on the company’s new platform.
“We created new pricing and packaging, and communicated largely through electronic means to educate [our customers] that they could extend the success of Salesforce.com across the entire enterprise,” Kelman said. “It took about six months to build up a critical mass of customer success stories, but in the end, our own customers ended up doing our marketing for us.”
The risk in Force.com’s launch was that Salesforce.com customers wouldn’t take to the new model.
“There’s always a risk in deciding to launch a new product,” Kelman said. “You have to have something pretty compelling to get developers to want to use a new platform.”
To date, Salesforce.com customers have created a whopping 85,000 custom business applications to run on Force.com.
Long term, Salesforce.com wants Force.com customers to run more and more of their applications “in the cloud,” meaning on Salesforce.com servers.
“The amount of data we’re managing for our customers has gone from 500 million to 1.5 billion rows of data and custom tables in the past year,” Kelman said.
Google Builds Android
The first mobile phone powered by Google’s Android platform was one of the most sought-after gadgets to hit the market this year.
Android is an open platform, which means anyone can develop applications for Android-powered phones, much as outside developers can develop applications for the iPhone. The difference is, Apple controls which applications meet its standards and which ones are made available at the iPhone App Store.
T-Mobile made the new phone, dubbed the “G1,” available to its existing subscribers first and sold out its original inventory before the device even hit the retail market in October.
However, Google didn’t develop the Android platform because it wanted to get into the cell phone business.
“Google is hugely dominant on the fixed Web,” Charles Golvin, a wireless analyst with Forrester Research, told the E-Commerce Times. “When you look at where its growth opportunities are, the next billion Internet users are much more likely to use a mobile phone to access the Internet, not a PC.”
For years now, Google has tried to get its search engine technology on mobile phones and devices with a fair degree of success. To do so, it’s had to deal with the wireless carriers — AT&T, T-Mobile, Verizon and Sprint Nextel, who often drive hard bargains, Golvin said.
“The presence of new Android phones will give [Google] a better negotiating position with the carriers,” he said.
Even if Android-powered phones are wildly successful, they will only control a small piece of the mobile phone market, Golvin noted. There are a number of competitors — such as Microsoft’s Windows Mobile operating system and the Symbian platform — that have much a much stronger presence after years in the market.
That said, Google’s platform may have one advantage over its chief competitor, said Golvin. The G1 is only the first of many devices that will use the Android platform — “unlike the iPhone, where for all intents and purposes, there’s just the one phone.”
One risk Google runs: It’s possible that the carriers could perceive it as a threat, should Android-powered phones be too successful.
“Some wireless operators could see Google as a competitor because it’s threatening their businesses,” Golvin said. Such a development could make it harder for other carriers to continue using Google as the default search engine on their devices.
Apple Launches the iPhone App Store
In launching the iPhone App Store, Apple wanted to replicate the success it has enjoyed with iTunes and the iPod. By tying the iPhone and the App Store together, Apple may have hit another home run.
Within a month of launching the App Store, Apple CEO Steve Jobs told Wall Street that hundreds of millions of applications had been downloaded from the site.
The impact of the store could extend far beyond that figure.
“There hadn’t been a general awareness among consumers about the widespread availability of mobile applications,” said Forrester’s Golvin. “The iPhone and the App Store changed that.”
Part of the problem was that the wireless carriers hadn’t done a very good job of marketing mobile applications, which have been around for years, Golvin said.
The rub — for Apple — could be a backlash from wireless carriers trying to sell their own applications.
“The App Store does an end-run around that,” Golvin said.
Yet Apple has an important group in its corner — software developers.
“[The iPhone] is capable of doing a lot of things, and Apple recognizes that not every good idea is going to come from Apple,” Golvin said. “It’s the same lesson it learned years ago with the Mac. Apple is unleashing the developers’ ingenuity onto its platform.”