Trying to woo partners, cloud computing vendors show them the money

Computerworld - One of the early promises of software-as-a-service and cloud computing was that it would allow start-ups to directly market their Web services while skipping the expensive, lengthy process of creating an ecosystem of partners and resellers.

"Building the channel" was an antiquated strategy, they argued, a legacy of on-premises dinosaurs such as Oracle Corp. and Microsoft Corp.

Cloud providers thought, "We can directly reach these people, so we don't need to invest in other channels outside of our brand," said Tiffani Bova, a Gartner Inc. analyst.

But since cloud computing is still more in the hype stage than the actual deployment stage, vendors have slowly begun to accept that "a single sales strategy will only get you so far," Bova said.

That has resulted in three out of the four largest cloud computing vendors taking major steps in recent months to attract partners to help them market and sell their services.

Last month, when Microsoft announced prices for its coming Windows Azure platform-as-a-service (PaaS), the plan included a 5% discount off consumption pricing for Microsoft's 400,000 global sales partners, a half-year discount of 15% to 30% off consumption prices for those signing a minimum six-month contract, and two as yet undetailed subscription plans for partners. (Consumption pricing would, for example, involve charging a certain amount of money per megabyte stored per month.)

A month earlier, Google Inc. had announced that resellers of its Google Apps productivity suite would get a 20% discount off list prices, as well as retain the desirable middleman role with customers.

Google responded to the news about Azure pricing a few weeks later with an aggressive marketing campaign in support of Google Apps and its closely related platform-as-a-service, the Google App Engine.

The most recent move was by Salesforce.com Inc., which on Wednesday introduced a new program to attract value-added resellers (VAR). The highlight is that VARs will be able to obtain Force.com for as little as $7.50 per user per month. That's 70% off the list price of $25 per month for each end user.

Salesforce.com partners such as Adam Caplan, CEO of Model Metrics, a Chicago Web development firm, said the company's plan is very financially attractive.

"We can get real margin on recurring revenue, which is a beautiful thing," he said. Moreover, Salesforce's VAR program encourages Model Metrics to resell Force.com to the 500 customers it shares today with Salesforce.com, he said.

Salesforce takes lead in winning developers

Force.com partners are also allowed to participate for free in the company's AppExchange, an eBay-like marketplace for cloud apps. There are 800 apps available today on AppExchange. A more impressive 120,000 apps have been built and run via Force.com.