Dead 3.0

Earlier, I covered the Highrise launch. TechCrunch just covered the launch as well. I mentioned that I thought 37 Signals was missing an opportunity to create a truly valuable platform for small businesses. Their services receive a lot of hype and have, up to now, been pretty successful. Yet they haven’t integrated their applications cohesively. Sure you can use Writeboards and Campfire in Basecamp, but it seems to me that Highrise fits right into Basecamp. 37 Signals’ Getting Real development methodology advocates launching fast but I’m somewhat confused. As I understand it, they’re a pretty small team. Their products are pretty simple and they’re raking in the cash. The extra investment to integrate the products seems trivial to the benefit to end users.

The small business SAAS space is starting to heat up quickly. This morning, WeBreakStuff launched GoPlan, a direct competitor to Basecamp by 37 Signals. Right on the heels of GoPlan comes the announcement at Signal vs. Noise that 37 Signals is launching their hyped contact management application, Highrise.

GoPlan has many of the same features as Basecamp including task management and real-time chat. GoPlan adds bug tracking and blogging to the project management mix. TechCrunch has a rundown on the launch and 5ThirtyOne has an in-depth comparison (between Basecamp, GoPlan and open source competitor ActiveCollab).

Highrise, at first glance, is a CRM application with a simple featureset. In typical 37 Signals fashion, the features are intentionally limited to reduce the learning curve and promote collaboration. 37 Signals designs great products but their business acumen is somewhat lacking in my opinion. If they were to come up with a comprehensive integration plan, they could easily bundle their services based on exact user requirements. The whole is greater than the sum of the parts… a segmentation strategy like this would allow users to extract more value and 37 Signals to generate more revenue.

The small business SAAS market is ripe for the picking. Who’s going to step up to the plate?

Google formed partnerships with the Rwandan Ministry of Infrastructure and the Kenya Education Network to provide roughly 70,000 students with access to Google Apps. While Africa remains an unprofitable proposition for many Western businesses, Google seems to recognize the long term benefits of partnerships with educational institutions. The partnerships are win-win for everyone involved–universities get enterprise-grade applications at a low cost, students get free access to better applications (than most in-house solutions) and Google locks in users at a young and crucial stage.

As a student at the University of Virginia, I constantly check my email. Using Google services for four (or more) years means these students are likely to become brand ambassadors for Google. You can bet they won’t be searching at Windows Live. In the long-term, partnerships with educational institutions allow Google to attract and retain a valuable demographic at a very low cost.

Checking out the featured list of Google’s educational customers, you can see the diversity they are creating. From Arizona State University to Thailand’s K-12 Prem Tinsulanonda International School, Google is locking in young people and planning for its future success.

Didier Bizimungu at SEO News Blog comments “I would have never thought that a big company like Google would invest in my home country.” Why not? It makes long term sense to make low cost investments in developing economies. Rwanda is a perfect example. Scott Chacon at JoinTheConversation agrees, noting that investments like this lead to direct economic benefits–such as outsourcing and call center ventures. I’m glad to see that Rwanda is taking the necessary steps to combat the genocide which wiped out an entire generation of young people.

I was reading a funny post earlier (Ten Things I Hate About You, Web 2.0) that got me thinking. I’m no fan of the Web 2.0 buzz, but I do like sound business models. Over at Webware, I saw an exciting preview of new Trillian Astra Web Client. Basically, it uses Flash (not the new Apollo) to launch an application independent of the web browser. According to Webware, “the new client has access to the PC’s system tray, the file system, and more.” That’s exciting.

There’s a lot of talk about the WebOS and lots of companies in the space, but I think they’re missing the point. The browser is too limited to support truly rich applications. Desktop applications and web applications each have their strong points–how can we get the best of both worlds? There’s a huge opportunity for someone to create the next Windows/Java/Flash.

Imagine using technology similar to the Trillian Astra Web Client. But instead of building an application, build a lightweight platform. Then open it up to developers to create applications that bridge the browser and the desktop. The distribution model would be unbeatable. A catalog of applications–both free and paid–which users could instantly launch from their browser. Let developers develop the applications and the “WebOS” could handle user accounts, preferences, and applications. The local file system and online storage companies could exists side-by-side. And of course the platform would be designed with collaboration in mind. The possibilities are endless, the key is scale.

Google Apps is taking the plunge and selling bundled services. They’ve priced it at $50 per user per year, relatively cheap. For that price you get Gmail, Google Talk, Google Calendar, Docs & Spreadsheets, Page Creator and Start Page. You also get a 99.9 percent uptime guarantee for your 10gb (per account) email. I personally think this is a great offering. The ZDNet SAAS blog makes some good points on the long-term implications of Google’s move into the market (emphasis not mine):

Well, I don’t see this eating into Microsoft’s core Office user base, not until the functionality improves closer to parity, which will take a year or two yet. Several people have commented that Microsoft’s customers will be able to use Google Apps as a negotiating ploy to get better prices out of Microsoft… Customers will now think twice whether they really need to stump up the full cost of Office when they can make do with Google Apps or some other alternative. A lot of the early adoptions will be tactical, short-term implementations that will gradually and imperceptibly turn into long-term commitments. Ultimately, if Google Apps can insinuate itself into replacing Microsoft Office as the no-brainer, don’t-have-to-think-about-it option, then that is when Microsoft will really have something to worry about.

This hits the nail on the head. Companies are going to give Google Apps a try and, if they like what they see, they’ll think twice before renewing their contract with Microsoft. VentureBeat is correct on the timing of the release. Google is stealing press from Vista’s launch and giving businesses an alternative to spending boatloads of money to upgrade. Google also brings credibility to the SAAS movement. While the offering doesn’t compete directly with Microsoft Office’s dominance, it is a first step. Could enterprise apps be Google’s second act?

Two final points: First, this open API is going to generate some interesting innovation. Second, Google made a smart decision signing on some big-name customers such as Salesforce.com and Procter & Gamble (the videos are great) and featuring them in the launch.