How Google’s New App Store Impacts Microsoft, Amazon, and Startups

Google announced last night that it has officially opened an online store for outside developers to sell their business software applications. The Google Apps Marketplace offers cloud-based software that is integrated with Google Apps—things like Google Calendar, Google Docs, and Gmail for businesses. (That might be a record for the number of Googles in one sentence.) Developers will give Google (NASDAQ: GOOG) a 20 percent cut of each app sale, on top of paying a one-time, upfront fee of $100.

The move is widely viewed as an effort by Google to compete more strongly with the core business software sold by Microsoft (NASDAQ: MSFT). The announcement happens to come just a few days after Microsoft CEO Steve Ballmer laid out his company’s plans for cloud-based software in a sweeping talk at the University of Washington. It also comes on the heels of Google’s acquisition of DocVerse, a collaborative software startup whose technology could help connect Google Docs with Microsoft Office.

And what about Amazon’s cloud computing platform? Thousands of startup developers use Amazon Web Services (AWS) to store data, and to host and manage their applications. But Google’s new app store doesn’t stop any developer from also using AWS. Rather, developers can still use AWS for back-end IT services and now market their software through Google Apps. Amazon (NASDAQ: AMZN) itself doesn’t have a business-app marketplace, though it is rolling out mobile “active content” for consumers in its Kindle store later this year.

In fact, Google and Amazon both provide cloud “infrastructure”—software platforms for developers and companies to use as much or as little cloud-computing resources as they want, without the expense and hassle of maintaining their own servers. Microsoft’s cloud platform, Azure, is getting in this game as well, but it’s not entirely clear how much Microsoft intends to tie developers into its cloud products. Microsoft’s core business thinking is rooted in proprietary desktop-based software and distribution partners—which isn’t a bad model, but how well it transfers to the Web developer ecosystem remains to be seen.

Bottom line: tech startups can now use a hybrid of Amazon and Google cloud services to develop, host, and market their software. This could potentially unseat Microsoft as the king of business software—but it’s still early in the game. (Though surely Oracle, IBM, and SAP are paying close attention too.)

Meanwhile, there are 50-some apps already available in Google’s app store. Among them are products from at least three Seattle-area companies that we follow regularly:

Concur, a Redmond, WA-based maker of corporate travel and expense management software, is offering an expense-reporting service for small businesses through the Google … Next Page »

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Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] Follow @gthuang

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