Salesforce to create on-demand 'AppStore'

On-demand business software provider Salesforce.com has begun work on a service which chief executive Marc Benioff describes as "an iTunes Store of on-demand apps".

The new AppStore service will allow Salesforce customers to browse, test and purchase AppExchange software from third-party developers.

AppExchange, unveiled at the 2005 Dreamforce conference, lets third-party developers create applications to supplement and extend Salesforce's CRM software.

George Hu, chief marketing officer at Salesforce, said that the company's goal was to provide a store for on-demand business apps with the same feel as Apple's on-demand iTunes music store.

"But instead of 'Mariah Carey' you have 'Compensation Management'," said Hu. "Fundamentally it will take our level of customer and partner success to a whole new level."

The AppStore service, which the company hopes to fully roll out by the end of fiscal 2007, is aimed at extending the capabilities for users and solidifying a new market for developers.

"We want to provide developers with all the physical infrastructure as well as the virtual infrastructure," said Benioff.

Salesforce could also see significant rewards if AppStore takes off. The company will offer vendors a pair of 'referral' services that feature priority placement in searches, marketing assistance, and access to seminars in exchange for a 10 or 25 per cent commission on AppExchange sales.

Along with the referral service, Salesforce will take a 20 per cent cut from vendors that choose to use AppStore's in-house billing, invoicing and collection services.

The launch of AppStore is part of a much larger plan by Salesforce to move from a subscription-based CRM service to an entire platform of on-demand business software driven by a huge network of independent third-party developers.

To facilitate this, the company is making efforts to foster the growth of a market for developers. Benioff said that the company hopes to push its Apex programming environment into beta status in the first weeks of the new year.

Benioff also announced that the first of Salesforce's 'Incubator' centres is scheduled to open in January.

The new programme, which is housed in the former headquarters of rival Siebel Systems, will offer developers access to special training sessions and seminars on launching a start-up and developing for AppExchange.

The incubators will also feature special access to venture capital firms and news media, said Benioff.

To gain access to the Incubators, which Salesforce hopes eventually to launch worldwide, developers will have to pay a $20,000 annual fee to rent a 'pod' within the building.

The aim of this, according to Benioff, is to create a business 'eco-system' of specialised developers centring around Salesforce.

"We have recognised that we cannot do it all, nor do we want to do it all. But the developers can," said Benioff. "We want to create an industry; we do not want to create a company."