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Adding Value Beyond 'Free'

Spiceworks' customer base has more than tripled since the beginning of the year, from 30,000 to 100,000 users, a testament to the promise of ad-supported software. Its next challenge: Going from free to indispensable.

The company's product, called Spiceworks IT Desktop, is used by helpdesk administrators to track the inventory of PCs, Macs, servers, routers, and printers, and to monitor and troubleshoot them. Customers don't pay; the cost is carried by advertisers such as Hewlett-Packard, Rackspace, and Sony that inject marketing messages into the Spiceworks environment. Businesses are warming up to the business model. Notably, Microsoft has just applied for a patent related to contextual, ad-supported operating systems and PC applications.

IT Desktop version 1.6 was released in June. New features include remote control management, integration with seven different antivirus products, and a customizable "My Spiceworks" dashboard.

What's next? CEO Scott Abel wants to make it easier for IT administrators to find what they need to solve everyday technical problems. Often that involves going to vendor Web sites to find detailed product info. "We're going to start pulling the Web inside Spiceworks, so all the information you need is in the right place at the right time," says Abel. The goal is "add value" to the user's day, he says.

Spiceworks is aimed at companies with up to 500 employees, but departments of larger companies have begun to discover it. Co-founder Jay Hallberg says the key to success was deciding to give away IT Desktop for free. "There's zero barrier to entry," he says. "Once there's a penny involved, it becomes a purchase decision."

Spiceworks received $5 million in series A funding from Austin Ventures a year ago.

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