To Launch iTunes-Inspired AppStore - InformationWeek

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Software // Enterprise Applications To Launch iTunes-Inspired AppStore

AppExchange will offer potential buyers the ability to search and try software, and then to buy and deploy it. said Tuesday it plans to open an online store that would provide a single place for companies to try, buy, and deploy applications from partners. The move expands the on-demand software vendor's role as an e-commerce hub.

AppStore grew out of's desire to make money from AppExchange, a place for partners to sell on-demand software that complements's software for managing sales operations. Until now, AppExchange, which launched in January, didn't provide much in the way of e-commerce features.

"What was missing was it actually being a marketplace," said Liz Herbert, analyst for Forrester Research.

Rather than have customers contract with individual partners, AppExchange will offer potential buyers the ability to search and try software, and then to buy and deploy it. The hub offers 430 applications from 230 partners. In addition, would offer partners marketing and e-commerce services for a fee.

AppStore was inspired by the simplicity of Apple Computer's iTunes site. "It was our vision of an iTunes music store for applications," said's Kendall Collins, senior VP of marketing.

For partners, the AppStore program offers the chance to buy into's marketing operation and e-commerce platform. The first offering, set to launch in the first quarter of next year, would provide premium placement on searches and AppExchange categories, and the opportunity to participate in joint sales events. The "standard referral" program would cost 10% percent of the partner's sales for the first 12 months.

In the third quarter of next year, plans to launch a "premium referral" program that would include joint marketing, such as e-mail campaigns, and access to's installed customer base. In addition, partners would be able to help train the company's sales force in selling their products. The premium program would cost 25% of the first 12 months in sales.

In the fourth quarter of next year, plans to launch AppStore Checkout, which would handle online ordering, billing, invoicing, and collection. Partners would pay a 20% commission on all amounts invoiced on an ongoing basis.

According to Herbert, the AppStore programs are a start in delivering what customers want: One vendor to buy a set of applications from and one point of contact for any problems. "Customers don't want to separately manage each vendor's contract," she added.

To become the central vendor for all transactions, recognizes it also would have to offer support and service-level agreements for all software sold through AppStore. Says Herbert, "This is only the beginning."

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