I've always thought it's a matter a time before SalesForce.com gets into the application hosting game. Over 19,000 developers have joined its AppExchange community. In addition to giving these folks API access, wouldn't it make sense to put them on SalesForce's network as well? It would strengthen developers' ties to SalesForce, and ensure that third party apps within the AppExchange ecosystem offer the same performance and uptime as the SalesForce's own products. Less than a year ago, SaleForce spent $50 million on data center #4. Surely there's some idle capacity that it could put to use?
The latest issue of Business 2.0 features 11 disruptive innovators. SalesForce.com is on the list. According to the article:
To maximize AppExchange's power, Benioff needs more apps. In a creative twist, he is leasing a former Siebel facility in San Mateo, Calif., visible from Highway 101, Silicon Valley's main artery, which he plans to turn into a kind of incubator for apps develpment. He'll lease cubicles for $20,000 a year to starups that want to build their businesses on top of his Web operating system. Salesforce.com will provide onsite programmers to help with coding questions, expose the start-ups to potential customers, and help them market their services.
In other words, SalesForce has set its sights far, far beyond simply offering data center capacity (to which incubator tenants will surely have access). It wants to become deeply integrated into third party developers' businesses. Wow.
OpSource, by the way, has a SaaS incubator too. (I wrote about OpSource CEO Treb Ryan back in 2001, right after SiteSmith, his previous venture, was acquired by Metromedia Fiber Networks for $1.36 billion. Treb co-founded SiteSmith less than a year before the deal; I calculated that he generated $2,588 per minute throughout the company's existence. Here is a smiley picture of Treb from earlier this week at Tier 1's Hosting Transformation Summit.) The company incubates 20 software start-ups at a time, offering free hosting for 6 months, as well as access to investors, enablement partners and other software firms within the OpSource eco-system.
Also interestingly, OpSource works with regular, non-incubator SaaS developers under a success-based pricing model. OpSource's fees are calculated based not on a customer's resource usage, but the amount of revenue his application generates.
What a great time to be a software start-up. And what tough competition traditional hosting-only providers have.
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