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Google apps store serves as launch pad for software start-ups

Several companies that were prominent on Google's Apps Marketplace have been acquired by larger firms after their customers increased rapidly. Other firms have received significant venture funding.

May 25, 2011|By Mike Swift

Reporting from San Jose — At Google Inc.'s annual developer conference a year ago, three executives of software start-ups that build business applications for the Internet cloud stood on the stage to praise the benefits of doing business on Google's new Apps Marketplace.

Since then, that Google connection has been like striking gold. Two of the start-ups, SlideRocket and Manymoon, have been sold to larger companies after their customers increased rapidly. The third, Atlassian, which builds software tools that help companies streamline their product development, won a $60-million funding round from Accel Partners of Palo Alto.

"A lot of good things have come since that event," said Chuck Dietrich, chief executive of SlideRocket. The San Francisco company builds Internet-based software that allows people to create and share presentations, aiming to offer a richer alternative to desktop software like Microsoft's PowerPoint.

SlideRocket and Manymoon are part of a wave of acquisitions of start-ups that sell popular apps on Google's online Web app store for businesses. Over the last five months, nine companies that were prominent on the Google Apps Marketplace have been snapped up by larger companies, with six acquisitions coming since the start of February.

And other start-ups, like Atlassian, have received significant venture funding, in part because of the rapid growth they achieved on Google's big stage.

"The relationship with Google … was a big part of our decision," said Rich Wong, a partner with Accel who now serves on Atlassian's board.

And Google likes seeing the start-ups acquired.

"It's part of our mission to not only give great customer apps, but frankly, to make these guys rich," said Scott McMullan, senior program manager for Google Apps Marketplace, which features more than 350 apps.

The boom of consumer smartphone apps has been extensively documented, but the growth of apps that run on Web browsers, particularly those used by businesses, is a less well-known but distinct software trend.

"At first companies were just moving email to the cloud," said Kat Eller, a Google spokeswoman. "Now they want to bring more and more applications to the cloud," including accounting, invoicing, project management and other business functions, she said.

Google's online Web apps markets include the more consumer-oriented Chrome Web Store and the business-focused Apps Marketplace, which launched in April 2010 and now has about 4 million users. They are elements of Google's larger strategy to promote software that runs on the Internet, or as the industry calls it, the cloud, as opposed to software applications that run on individual hard drives or local networks.

Google is about to launch another prong of that strategy with Chrome OS, with the first computers running the Mountain View, Calif., Internet giant's Web browser-based operating system scheduled to go on sale June 15. Google is offering monthly rental programs to businesses and schools for Chromebooks, the new netbooks built by Samsung and Acer that will store virtually all their data on online services like Google Docs and Gmail.

For start-ups, "the Apps Marketplace helps make them more prominent and helps them accelerate their growth," McMullan said. "In general, we seem to bring them customers."

Google is clearly thrilled by the wave of acquisitions. Its apps stores are emerging as assets in its battle with Microsoft Corp. to try to get businesses, governments and universities to adopt cloud-based software like Google Docs and Gmail over Microsoft's bedrock productivity software Outlook, Word and Excel.

"Some of the apps we've seen acquired were part of the visibly top group of apps," McMullan said. "We don't take credit for their success, but we think we drove a lot of their success."

Palo Alto-based VMware announced its purchase of SlideRocket on April 26. Terms of the deal were not disclosed, but SlideRocket CEO Dietrich described them as "very favorable."

In addition to Manymoon, which has had more than 50,000 businesses adopt its social productivity app, enterprise cloud computing company Salesforce.com bought two other start-ups on the Apps Marketplace — email contacts company Etacts and communication technologies company Dimdim.

Canadian smartphone and tablet manufacturer Research in Motion Ltd. bought two Apps Marketplace companies, Gist and Tungle, which make apps that help workers organize their contacts and calendars.

Dietrich said Google's huge audience allowed smaller companies to quickly gain large audiences. That means, he said, they can rise and fall on the quality of their software.

SlideRocket, which was a launch partner with both the Google Apps Marketplace and the Chrome Web Store last year, received 50,000 customer sign-ups in the 10 days after the launch of the Web Store in December. Dietrich said SlideRocket would retain its autonomy under VMware, and SlideRocket now has more than 300,000 users viewing its presentations.

"This is what we call the consumerization of enterprise apps," Dietrich said. "Our relationship with Google is a reflection of our business mode. We have a product that is extremely easy to understand, that is easy to adopt. It's like a consumer product: You log on, you have a great experience, and you tell your friends."

Swift writes for the San Jose Mercury News/McClatchy.

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