Online Stores Target Enterprise Apps
Downloading desktop PC applications off the Internet is not a new concept. However, a new trend is taking place where vendors are building sites that offer one-stop shopping for enterprise-scale server applications. A new Web site launched last month targeting this market sector offers intranet and extranet software from 30 vendors, including Netscape Communications Corp. and Informix Software Inc.
The Web site, Intraware.shop (www.intraware.com/shop), is maintained by Intraware Inc. (Orinda, Calif., www.intraware.com) as an electronic software distribution (ESD) service for enterprise software applications, priced primarily in the $5,000 to $100,000 range. Packages offered "are focused on intranet and extranet software," says Katy Turner, director of Intraware.shop. Revenues from transaction fees, as well as fees for proprietary research services, will support the site, she says.
Intraware expects its number of online vendors to double by next summer, Turner says. Still missing from the roster, however, is Microsoft Corp. "We currently don't have an arrangement with Microsoft, although I would expect that to change over time," Turner says. "One of the challenges we've had is educating vendors about ESD," she says. Many offer single-license copies of software, but haven't addressed the corporate ESD market. For example, while Microsoft does offer PC personal productivity software through another ESD site, www.beyond.com, the company has not implemented an ESD strategy for the corporate space.
In addition, many larger vendors still have "legacy" distribution channels. Turner predicts, "There's a certain level of education and maturity in this market that needs to happen before the big vendors make the change -- probably an ESD-enablement of existing channels. ESD is, in many ways, displacing the old channel."
ESD will have the greatest impact on indirect sales channels for products that have limited value-added requirements, notes Steve McHale, senior channels analyst at International Data Corp. (IDC, Framingham, Mass.). As ESD grows, resellers will need to "carve out specific niches that will enhance the value of the software in order to remain competitive." IDC projects that the worldwide market for ESD will grow by more than 130 percent annually, from $200 million in 1997 to $5.9 billion by 2001. While ESD represented about 7 percent of software sales in 1997, IDC estimates the percentage will grow to 60 percent by 2001, and a growing proportion of this will be corporate purchases.
"ESD will provide vendors with incremental revenue growth, cost savings and improved customer communications, as well as presenting an important weapon in the fight against software piracy," McHale notes.
However, the enterprise market has a number of characteristics that have historically made electronic software purchase and delivery difficult. Procuring large-scale applications involves sophisticated pricing models and requires significant research and in-depth product trials. "Oftentimes, you can't get pricing of any sort unless you contact the manufacturer, which means you are already in the pipeline and being badgered by a salesperson," Turner says. Intraware.shop seeks to remedy this through an online pricing wizard to help users configure pricing on a sale.
A volume-pricing wizard is planned for installation by the end of the year, Turner says. Other features include software delivery to multiple sites, a "try-and-buy" feature that allows customers to download software, an online advice forum, and a demo center with interactive product demonstrations. Intraware.shop will also serve as a backup source.
Downloaded software is compressed with InfoZip, which includes 128-bit encryption technology. While Intraware will provide pre-sales and installation service, additional after-sales support must be contracted through individual vendors.
Cerent Corp. (Petaluma, Calif., www.cerent.com), a telephony equipment company, has been using Intraware.shop to speed up the procurement process. James Dehnert, MIS director at Cerent, reports he was able to download a package in several minutes, rather than wait two to three days for a CD. "It took me longer to get the procurement paperwork signed off internally than it did to get the software quoted, ordered and fulfilled online from Intraware.shop," he says.
In a related development, Intraware announced that it is providing the content for IT Knowledge Center, a resource service on Netcenter (www.home.netscape.com), the Internet portal from Netscape. The service, which incorporates some of the same online software evaluation features included in Intraware.shop, was expected to be live this week.