Microsoft Readies On-Demand Marketplace Of Partner Wares

The project, currently tagged with the working name "Microsoft Solutions Marketplace," looks similar in spirit to Salesforce.com's AppExchange, a Web site that hosts add-on applications available for extending the company's on-demand software service. Like Salesforce.com, Microsoft eventually plans to enable customers to directly purchase and download applications in the marketplace.

Microsoft's forthcoming marketplace was previewed as part of its introduction of CRM Live, the new hosted CRM service Microsoft will launch later this year. While CRM Live is far along on its development curve, the marketplace is a more nascent project. Microsoft CRM General Manager Brad Wilson said he expects it to launch sometime in 2008.

The marketplace will feature add-ons for CRM Live, Office Live and any further on-demand services Microsoft creates. Like Salesforce.com's AppExchange, it will encourage users to rate and review applications, many of which will be available for immediate delivery. In the keynote presentation, Microsoft demonstrated the process of downloading and installing a new vertical template to customize CRM Live in just a few minutes.

Details about the marketplace's functionality and how it will handle processes like customer billing -- a feature Salesforce.com is still working to develop almost two years after it launched AppExchange -- are still being worked out, Wilson said. Also undecided is whether Microsoft will charge partners for participating in its marketplace, a model Salesforce.com is experimenting with on AppExchange.

"We haven't defined the partner contribution program," Wilson said euphemistically. ("They're still working out the vig," one WPC attendee quipped.) Discussions about whether partners should pay Microsoft margins for participation are still under way internally, with various executives arguing different sides of the issue, Wilson said.

Since Salesforce.com pioneered the space with AppExchange, several vendors have launched similar networks to promote wares from their ISV partners. Linux vendor Red Hat is in the process of building its Red Hat Exchange network, and WebEx is developing WebEx Connect.

Frank Lee, president of Microsoft partner Workopia in San Francisco, said he can't wait for the marketplace to go live. Workopia is currently constructing Microsoft CRM verticalizations for various industries, and would jump on the chance to sell and promote those packages through a Microsoft marketplace. Microsoft's "solution finder" system, a more limited version of what Microsoft eventually envisions for its marketplace, has already been generating a steady stream of leads for Workopia, Lee said.

"It's been a wonderful source," Lee said. He hopes any marketplace Microsoft launches will also encourage and easily enable professional services purchases, in addition to add-on applications, since services remain central to Workopia's business model and revenue stream.

"Live software requires live services," Lee said. "Services is our core. This is still software, and businesses still need value-added professional services."