App stores have become commonplace in the software industry, but not as far as the software development life cycle is concerned. To change this, Atlassian, at its annual self-titled Summit in San Francisco last week, opened the doors to its new marketplace, where developers can access development process and collaboration tools to improve their agility.
Atlassian turned in its first hundred-million-dollar revenue year in 2011, an impressive feat for a company that was once considered an upstart by then-heavyweights Borland and HP. The company has attracted big-time investors from Accel Partners, and last fall it moved into a swanky new SOMA (the hot startup district South of Market Street) office in downtown San Francisco, complete with all the beanbag chairs, free sodas and granola bars you’d expect from a hip software company.
At the Atlassian event, third-party software and collaboration tool vendors demonstrated their products in the new marketplace. Indeed, on its launch day last week, the Confluence enhancement suite Zen Foundation was trumpeting a day-one site license sale to Walgreens, without any actual meetings between the pharmacy chain and the software vendor. This, claimed Atlassian cofounder and CEO Mike Cannon-Brookes, is the power of his company’s new business model for enterprise software sales: It’s about the quality of the tools, not the quality of the sales engagements, the lead generation or the giveaways.
Atlassian’s business model competes with open-source and free software tools, not with large enterprise software packages that cost six figures. “Our tools have to compete with free,” said Cannon-Brookes. “We have a customer base of people who’ve said, ‘I care about my tools.’ It’s strange more companies don’t say that.”
Thus, he said, it’s been a rough process for some of its initial marketplace vendors to meet their requirements. “Some [vendors] are a little upset, but we kept knocking them back, saying ‘This is not good enough yet.’ We run our QA guys over it, and we’re careful because everything in there has our brand on it, too.”
The Atlassian Marketplace also includes some enterprise-focused services and features that Grant said will help expand the company’s reach into the largest of development shops. Specifically, Marketplace purchases can be license-synchronized, so that only one purchase order per year is required to pay for Marketplace purchases. The alternative would be that each department purchaser would have to get a separate purchase order and check written up for each new plug-in the team wants to buy.
But just how will anyone make money on the Atlassian app store, when statistics tell us that the Top 10 applications in the iPhone or Android app stores are earning all the money? “The difference is, we’re not going to have a million applications,” said Cannon-Brookes. “Secondly, we’ve tried to make as many different ways of discovering applications. We tried to make the categories really intelligent, and based them on business function.”
Picking up on JIRA
As such, the growth of JIRA and Confluence since the founding of Atlassian in 2002 has come from the budget-friendly price and user-friendly focus. It’s spawned a vibrant ecosystem of users who’ve put the issue-tracking and wiki software to various uses, or expanded these platforms to include more and more of the software development life cycle.
In March, Atlassian released version 5.0 of JIRA, which opened up every data point in the issue tracker to the outside world via a RESTful API. This has been quickly utilized by third parties, some of which are even basing their futures on Atlassian’s platform.