Monday, June 23, 2008

Google AppEngine

There's a lot of buzz out there about how Google AppEngine is a game changer. My question is: Which game? AppEngine reduces the cost of hosting a web application down to zero. Zero is a pretty profound number. You don't even need to provide a credit card number in case they might want to charge you some day. All you need to a mobile phone number capable of receiving text messages. This means that not only is there no up-front cost, but also that there is no risk that you will suddenly incur huge fees for exceeding transfer quotas when you are lucky enough to be Slashdotted. Your application will just be temporarily unavailable. Hey, if that service level is good enough for Twitter, it's good enough for you, right?

The Open Source Game

Starting an open source project has been free for years. Many project hosting communities exist, providing projects with source code management, issue tracking, wikis, mailing lists, other features, and even a little visibility within their directories. Web hosting is not exactly expensive, especially light-weight scripting languages like PHP, Perl, and Python; but it still costs something and therefore requires a sponsor. Often times for a fledgling project the sponsor is also the founder, who also happens to be the lead programmer, help desk, and promoter. There are some who do an amazing job of doing this, but for the most part I think project founders choose to wait.

Note: If I am wrong about the availability of good, free hosting for open source web applications, please provide links to them in the comments section. I would love to be proven wrong on this.

The Startup Game

If Paul Graham were to comment on AppEngine, it probably be that it eliminates one of the last remaining excuses anyone may have to launching a web startup. If you have an idea, some time, and can hack Python – you can launch a web application with AppEngine. You don't need money, infrastructure, long-term commitment, or any of those other things that may scare a person away from a startup. With AdSense, you even monetize your application without hardly any effort.

Of course there are limitations. For one thing, AppEngine is very limited in what it can do. Pretty much any idea with even moderate bandwidth, storage, or computation requirements that cannot be delegated to another web application (e.g. embedding YouTube functionality) is out. So, unless you plan on building a business based on mashing together existing applications, then AppEngine probably is not your free lunch. That being said, I fully expect that Google will gradually add APIs for all of its applications to AppEngine, thereby providing a very powerful base for new-but-thin ideas.

The R&D Game

Just for a moment, let's say there was a company that required all of its employees to spend 20% of their time working on a project other than their primary job. This is a company that is betting that it cannot predict which idea is going to be the next big thing, so it must try lots and lots of things and see what sticks. As this company grows, providing infrastructure for those projects would become a real challenge. Especially providing infrastructure that allows them to be testing in the wild as opposed to simply internally, and allows the projects to instantly scale if they just happen to turn out to be a success. This company would also want to ensure their employees weren't slowed down by having to deal with muck. Such a company would need an infrastructure that could scale to support many, many applications without burdening infrastructure teams. Such a company would need AppEngine.

Now extend the idea further. Let's say it doesn't really matter whether the next big thing was developed by an employee or not. What matters is that the next big idea is bound to the company, for example by using the company standard authentication mechanism or, more importantly, the company standard monetization mechanism.

Ok, so we all know what company I'm talking about. AppEngine allows Google to outsource some of their R&D at very low cost, and given that most successful AppEngine developers will probably choose AdSense to monetize their creations, Google stands to profit regardless of whether they ever pay any fees or not. In cases where creators do pay hosting fees, the great Google gets paid twice.

The Recruitment Game

Distinguishing among potential recruits is very challenging. The accomplished academic is almost certainly smart, may fall apart when asked to work with a significant team on something important to the company rather than a research interest. The industry veteran may have great corporate experience, but political skills could be masking shallow or outdated technical skills. The bottom line is recruiting is hard because in most cases you never see a direct sampling of an individual's work. At best you can see what a team he was on produced and take at educated guess as to his contribution. Open source projects can provide more information, but for most programmers there is no real motivation to participate in such projects.

AppEngine provides more motivation to the programmer, because he can more readily show his creation to other people without incurring any cost and there is always a chance that he will make some money. There are probably a lot of talented “almost founders” out there who would start a company, but perhaps lack some of the personality traits necessary to do so or found themselves in a situation where they need a steady income stream that simply isn't available for the founder of an early-stage startup. These individuals, and others, will make great pickings for Google.


Long term, in order for Google to grow, it has to attract more people to spend more time on sites displaying AdSense advertisements. Over the past few years Google has come out with countless new online services, most of which on still in beta, and none of which has yielded anything close to the monetization potential of their search business. AppEngine allows them to vicariously service the long tail without continuously expanding their already highly diverse R&D efforts. As a nice added bonus it will provide the opportunity to acquire future high-value startups before they are even real startups by simply hiring the developers and maybe tossing some stock options their way. On the flip side, I don't think AppEngine is going to have much effect on mainstream web application hosting. The API is too constrained and for a company with resources the ties to Google are most likely too tight. So I predict AppEngine will be more of a muted success for Google. The infrastructure built for it will be useful internally, it will help them get more sites up more quickly addressing eclectic needs without burdening employees, and it will provide a proving ground for future hires and possibly very early stage acquisitions. This could all add up to AppEngine being a very significant success, but it also means the success may out of the public eye.

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