One concept which goes with almost all discussions of PaaS (Platform-as-a-Service) is the  application marketplace or app store.

The Promise…

The argument hype goes something like this: If you specify an platform standard, get more than one hoster to host it and finally convince people to develop little applications (or widgets) for it, everyone wins:

• the hoster can leverage its existing customer base including the possibility of cross-sells
• the application developer can sell his app leveraging the combined numbers of customers of all participating hosters
• the customer having access to a huge selection of apps able to be integrated into his homepage

etc.

Reality sets in

Besides technical and cooperational problems the equation bases on the assumption that you get a lot of small or medium sized ISVs (Independent Software Vendors) to program against your platform specification. If you are aiming for business developers this means there has to be enough money in there for them to lock into the platform constraints. The promise now is that electronic marketplaces lower the barrier of entry for these developers enough to ensure profit for all.

Promise? Maybe you’ll say »Hey, I know this works! What about Apples app store?« Exactly my first thoughts but let’s look at the numbers provided in a recent blog post of an developer who has to know:

According to the developer of Zen Jar which ranked around position #30 when the article was written he earns as much as……20$ a day with his app. Considering that there are currently over 36.000 applications to choose from I personally had expected much more profit from entering the Top 50 in a popular category.

What are the reasons for this? For one it’s the standard pricing of .99$. To become really rich at this price you have to sell a lot. Looking at the numbers in the article at position #34 you can expect 30-35 downloads a day. If this is not enough for you you have to do marketing which cuts your profit even further.

As also is mentioned in the article this doesn’t mean the business model is wrong. It just shows that app stores aren’t the 1, 2, 3, PROFIT guarantee as some people suggest. There are still some problems to make the model work as »advertised«.

So what?

Just providing a platform to develop and run applications on is not enough. Providing a place to list this apps and provide services for licensing and billing is not enough, either. What is often missing in the discussion of the »application marketplace« is how to aid developers in marketing their product. If you leave the myriads of »little« business oriented developers alone with this task they won’t have enough resources to do it on their own and still be profitable enough.

One more challenge to overcome in the PaaS opportunity…