Salesforce needs a viral booster
By Vivek | July 9th, 2007 at 10:18 pm ET
I had noticed the Salesforce AppExchange stats before but had it might be a typo. But a blog post at Salesforce puts the stats in clear as to the performance of Salesforce AppExchange. A quick run down of the numbers -
- Salesforce AppExchange Live since: 18 months
- Total Apps: over 600 apps
- Test drives: 235,000
- Installs: 29,000
- Claimed funding for startups: $285 million
If I understand the words correctly, till date of all the apps available in the application directory at Salesforce, only 235K have ever been tried and eventually out which only 29K installs have been put under active use i.e. paid for in case such an option existed. Now that is an abysmally low number of you compare to what has happened to over at Facebook in the past 6 weeks, where some of the lower end integrations have even managed to get those kind of installs single-handedly. In fact in the first month itself Facebook users added more than 65 million apps.
Anyway, looking at the list of top 10 installs from AppExchange, 7 apps have been developed by external companies out of which 3 are for free(Mapquest, Quote Generator, and Pollzter). This leaves out 4 apps that have made any kind of direct money at all from being a Salesforce partner. Assuming the best case that these apps have captured 30% of the total install base and making $100/install, that brings the total revenue per app per month to $217K.
Even considering all the 29K installs made $100 month for their development companies, the total earning comes to $2.9 million per month or $34.8 million per year, which is far shy from the $285 million invested in these startups.
Okay accepted the fact that most of the Facebook apps are earning nothing, but at least they have the numbers to speak about instead of an app that not many users know about and even lesser that ever care to install and use them.
Now I might be hitting the wrong wall out here, but in my opinion, Salesforce needs a serious viral growth strategy to support it’s development partners. Especially the slow moving Webinar strategy is never going to work out where they plan to outline new programs for lead generation, which obviously will come for a price that most of the startups don’t want to pay for.
I would say, make that lead thing free and open and let the developers pick and choose the best option for them. Controlled growth can only deliver controlled revenues, not Facebook type multi-billion dollar IPO dreams.
on July 9th, 2007 at 11:14 pm
Those numbers seem consistent with our experience. But, you need to balance that against the fact quite a number of the top apps generate quite a bit more revenue that $100/install. Many, if multiple seats are purchased, generate far more than that per month on a recurring basis.
on July 10th, 2007 at 12:30 pm
Keep in mind that the 29,000 install number doesn’t translate to 29,000 users. In fact, a single install at a large company may yield 1,000s of users for the AppExchange app and partner. Due to the nature of enterprise software, it’s not uncommon to see AppExchange companies do fewer deals (installs) at large end customers that yield significant revenue/deal due to the sheer volume of users/seat licenses.
on July 10th, 2007 at 2:49 pm
Like most things (virtually everything in business) the 80/20 rule applies.
After seeding the Exchange for free, Salesforce must have done the math and realized that only 20% of the vendors are successful and thus comprise 80% of the potential revenue on the Exchange.
The problem with this strategy is that this underestimates the VOICE of the remaining 80% (”the voice of the long tail) that has cost them unknown dollars in negative PR and slow AppExchange adoption.
To the remaining 80% who are left out in the cold (who don’t financially benefit from the AppExchange), Salesforce appears to be a money-grubbing, nickle and diming software company.