Long Tail Marketplace for SaaS

Ed Sim discusses "frictionless sales" and gets to the heart of the matter - which leads me back to thinking about Microsoft's responsibility to reduce friction for our partners as the SaaS segment expands.

Here's an idea I have now heard as a request from every SaaS company I've spoken with - those running on LAMP, running on Windows, or whatever infrastructure: Microsoft should create a SaaS Marketplace based on a Microsoft brand or property and use it to reduce their cost of sale.  It does engage all three of Chris Anderson's Long Tail forces...

In principle, the idea is simple and not new - but it's powerful for us because of our scale:

• the big opportunity in SaaS is to sell to the "dark matter" - millions of small businesses - but there's no easy way to scale across this collection of tiny markets
• across our properties we have assembled a pretty good idea of what different customers are interested in
• we can use this information to filter content & target offers for SaaS applications appropriate to the customers' location, industry, and size - using MSN, small business, or other web channels into the user (including smart clients like MS Money)
• instead of generating revenue from licenses, we can shift to the front end of the transaction - advertising and lead generation
• we can partner with major service providers in order to provide even better targeting, and potentially a payment infrastructure
• this helps reduce the cost for partners to address otherwise infeasible "markets of very few" and increases value for the customers who make up those same small markets

Of course, this doesn't solve the technological problem of having appropriate content, application behavior, and customization that fits these same small markets in a cost-effective way - Jotspot and others are cracking this nut (and there will be many correct solutions), but it does handle part of the distribution problem.

I like this idea because it is an attempt to mirror the software value shift represented by SaaS - charge for the software experience in units that more closely match the value that the customer is receiving.  By moving where we sit in the value chain - closer to the customer - we offer more value to our partners by sourcing deals for them and earn our place in the ecosystem as a business platform.

Additionally, I have heard the need to establish a real community in the market - a place for conversations between SaaS ISVs, VARs, and SIs to discuss & coordinate about the future shape of this value chain and how to do business.  I'm interested in reading your suggestions about such a community site and how it should be structured.

By the way, did you know that Microsoft owns softwareasaservice.com?

Comments

[funnycakes.blogspot.com]

Microsoft seem to get going there, but there are others emerging too. Jamcracker in silicon valley, salesforce of course, another called morph app exchange which used to be a grails app hosting service, and saasplex from Ireland with their workclouds.com site. The non-microsoft world needs representation too!