Amazon.com Inc. remains as protective as ever of the technology that powers its Web site. "We don't go into detail about what our underlying infrastructure looks like," says chief technology officer Al Vermeulen. At the same time, though, Amazon is throwing open its site to outside programmers, providing access to databases and features that have taken years and something approaching $1 billion to develop over nearly a decade. "We're going to go full bore in exposing all of our platform," Vermeulen says enthusiastically.
Amazon is going "full bore in exposing all of our platform," says chief technology officer Al Vermeulen.
Photo by Andy Reynolds
The idea proved such a hit that more than 50,000 programmers have signed up. Within the next few weeks, Amazon will introduce Amazon Web Services 4.0, which opens its data fields even more.
Amazon and eBay Inc. have cemented themselves as hubs of commerce when it comes to consumer online shopping. Now they're emerging as hubs of software-development activity, where openness breeds innovation and innovation generates sales. "We think Web services feeds directly into making that flywheel spin faster," Vermeulen says.
Last year, eBay took a small, invitation-only developer program that had been operating since 2000 and opened it to the public, making the API to its E-commerce software available for download and supplying a software development kit for it that works with popular developer tools from Borland, Microsoft, and companies that build tools based on the Java programming language.
Today, around 8,000 companies or individuals have become members of the development program, and about 600 applications built by independent developers use eBay's servers. One billion times a month--more than 30 million times a day--an application makes an XML hit on
eBay's database. Attendance at the company's second annual developers' conference, held last month, jumped to 500 from 200 a year ago, and CEO Meg Whitman gave the keynote address for the first time.
Amazon and eBay, in turning themselves into software-development hubs, are once again expanding the possibilities--and increasing the pressure--for any company that wants to be a center of E-commerce. As Amazon and eBay popularize the use of programmable Web sites, other E-businesses might find they, too, want to open their Web sites up to a community of developers--be they independents, or programmers from customers or business partners who want to add their own innovations to a site. "There's no reason we can't have thousands of developer communities for thousands of different Web sites, even on a small scale," says Jeff Barr, Amazon's technical program manager. Other businesses will find the hard part isn't exposing the inner workings of a site as Web services but establishing a business model that works with it. "There has to be real sound financial return for doing these things over the long term," he says.
Google Inc., the search-engine powerhouse that's preparing for an initial public stock offering, publishes on its Web site an API that lets users write applications that incorporate Google's search engine. The company doesn't have formal developer programs like eBay and Amazon do, but it's a start.
EBay needs to open up to outside developers, Oddcast's CTO Gil Sideman says.
Photo by Andrew Hetherington/Redux
Oddcast's software lets companies talk to would-be customers through their animated characters. Using a recording mechanism or text-to-speech software, an eBay retailer can have an avatar pitch customers about what promotions are available. Oddcast hosts the software that runs the animation on its servers. So far, a few dozen companies have signed up for the service.
EBay needs to open its environment to outside developers because the company can't spot all the market niches eBay customers might want. "The willingness to be open and expose the innards of their system to an outsider--for eBay, it's a smart move," Sideman says.
Here's a measure of how important this open approach has become to eBay: About 40% of the items listed for sale on eBay's U.S. site come in through its API. That means two of five products are loaded onto the site software-to-software, rather than manually posted using a browser-based form. Major retailers are taking advantage of these tools, and software companies are hustling to make their tools fit the model.
Sears, Roebuck & Co. uses eBay to unload surplus and damaged goods and liquidate returned items. Shoppers on Sears.com can bid for clearance goods such as DVD players and Craftsman tools on eBay, then pay for them through Sears' site. For overstocked or damaged big-ticket items such as washing machines, big-screen televisions, even tractors, customers can buy on eBay and have the goods delivered to their homes from one of about 15 "eBay-enabled" outlet centers. "We think this is a big emerging market," says David Southworth, Sears' divisional merchandise manager. Sears also offers an eBay-powered "liquidation center" for returned merchandise. Southworth says that center is starting to catch on with buyers: It's doing more business every month this year than it did during all of 2003.
SAP is testing software that plugs its applications into eBay's API. Last month, it released that capability to select customers in the United States and Germany as a standard part of its mySAP customer-relationship-management application and as an add-on for its R/3 enterprise-resource-planning software. SAP plans a general release soon in those markets, as well as in the United Kingdom during the fourth quarter.
W.W. Grainger Inc., a distributor of industrial supplies, has been testing the software, and SAP hopes to have 10 to 20 customers running it by the end of the year. "There are a lot of [SAP] customers who would like to have a new sales channel," says Maher Chebbo, a director in SAP's venture-capital unit, Inspire. By Chebbo's reckoning, some of those customers are clearing hundreds of thousands or millions of dollars a year "mass selling" on eBay. Next up: MySAP Business One--a product for small and medium-sized businesses in the United States, Europe, and Israel--is getting tweaked so customers will be able to use it to sell on eBay, too.
To make this hub-of-development concept work, Amazon and eBay needed to learn how to inspire clever programmers to work on their platforms. They're succeeding in part because they have the kind of user numbers that interest programmers. But they're also presenting programmers with a new challenge in the world of Web services: tools and technology for integrating Web platforms. The companies are fast movers when it comes to exposing the capabilities of their platforms at a time when many companies still are cautious about Web-services technology. They're showing that opening up some of their technology vaults can spur the creation of other software apps that expand their market reach.
EBay's developer community is growing fast, says Jeffrey McManus, eBay's senior manager of developer relations.
Through deals with Microsoft and SAP, eBay is exposing the interfaces to its technology, both through the desktop tools that developers and average PC users touch every day and through the back-office and sales systems run by businesses. As of this spring, for example, users of Microsoft's Office 2003 suite can manage their auctions on eBay with Excel and FrontPage, including pricing data and building a Web site. Office 2003 applications are capable of consuming XML Web services, including those exposed by eBay's API. With Excel, for example, users can review their sales history and upload product listings to eBay.
Microsoft finds common ground in the E-commerce companies' development efforts. Many of the programmers drawn to this approach are with small businesses or on their own. Microsoft estimates there are about 18 million nonprofessional programmers--triple the number of pros. Amazon and eBay want the best of them writing to their platforms, and Microsoft wants them to use its .Net and other technologies, so it's offering low-cost tools in hopes of converting them to its higher-priced products if they turn pro. "There's definitely the opportunity to upgrade the hobbyist users," says John Montgomery, director of product management in Microsoft's developer division (see story, p. 48)
Working on Amazon or eBay platforms lets individual programmers or some independent software vendors tap functions beyond what they could in isolation. "This is part of a shift that's going on in what the ISVs in the world look like," Montgomery says. "EBay, PayPal, and Amazon today run Web sites that move money and goods around. At the same time, they offer functionality that can be used independently of their sites. These types of functions are becoming more woven into the fabric of how people think about applications." EBay's Web-services platform, for example, lets hobbyist developers access things they use repeatedly: software for hosting catalogs, running virtual shopping carts, and processing payments. At the same time, the Windows world is moving from Microsoft's '90s APIs, called Win32, to Web services and "managed code" in its .Net APIs. "The more developers know how to use those technologies, the bigger the Microsoft ecosystem is," Montgomery says.
Web services, and the ability to tap into Microsoft's capacity to reach millions of users, is a key plank in Amazon's strategy for its developer program as well. "We've put almost 10 years of development into the Amazon platform," Barr says. "We're telling developers they can take advantage of the functionality we've already built." The result: innovative applications such as the Hive Group Inc.'s Honeycomb program, which displays in vivid graphics how hundreds of products sold on Amazon are related by sales price or sales rank.
The applications create a buzz of consumer and partner activity around the Amazon site. Thousands of Web-site operators who earn money by generating sales on Amazon now use Web services to create links between their own sites and Amazon's. Independent developers are getting into the action on Amazon's site, too, writing applets that they then license to others.
Working together, Amazon and Microsoft created a downloadable plug-in that works with Microsoft's Office 2003 desktop suite. Called the Office 2003 Research and Reference Pane, the code makes it possible for users to launch product searches from within, say, Microsoft Word and cut and paste the information they get into documents. It wasn't the only time Amazon and Microsoft collaborated on Web services--last fall, Amazon CTO Vermeulen demonstrated similar integration using Microsoft's next-generation Longhorn operating system.
Barr says it makes sense that the company and Microsoft work together, given the proximity of their headquarters in the Seattle area. A former lead developer and program manager on Microsoft's Visual Studio .Net team, Barr still drives past Microsoft's Redmond campus each day on his way to work. But more than that, he says, it's the here-and-now applicability of Amazon's Web services that brings the companies together. Visual Studio programmers can quickly move past the "theory" of Web services by developing lightweight applications that tap Amazon's systems.
So just what gets dished up by one of Amazon's Web services? The output includes product details, search capabilities, customer reviews, sales rankings, wish lists, and registries. Amazon gives programmers the option of choosing "lite" or heavy versions of those categories, depending on their needs. Its ground rules: Programmers must link to the Amazon site, pricing data can only be stored for an hour, data can't be resold, and applications must be written so that they don't make more than one call per second to the Amazon site.
Clearly, the developers writing software to integrate with the E-commerce engines of the biggest Web sites are more than just fanatics doing it for fun. For one thing, there's a careful vetting process of developers who can write commercial apps that use the companies' APIs. Oddcast's Sideman, for example, says eBay's detailed questionnaire took him half a day to fill out, including listing technical and business information about the company, citing examples of its products in use, and describing what technology would touch eBay's IT environment. A technical reviewer phoned two days later with more questions.
"It's more than just eBay power users," says Ron Schmelzer, an analyst at technology consulting company ZapThink. "There's a whole set of emerging companies that realize eBay is a platform, a set of technology they can access." Schmelzer says the trend is for eBay, Amazon, and Google to become, in essence, business-process outsourcers.
Alex Poon spent five years employed as a developer and research-and-development manager at eBay, then left the company two years ago to start Bonfire Media, a three-man software-development shop in Silicon Valley dedicated to writing software that runs on eBay's platform. Bonfire sells an app called Pocket Auctions for eBay that lets Sprint or AT&T mobile-phone customers search for, bid on, and buy eBay-auctioned products from Java-enabled cell phones for a few dollars a month. There are "tens of thousands" of customers, Poon says; in return, he pays eBay an annual fee of about $5,000 to be part of its developers' program and about $1 for every 1,000 API calls his customers make to eBay's software. The price varies based on the number of API pings a day from an application and other factors. Bonfire's customers "really feel like eBay is a commerce platform, and the Web site is just one way for users to interact with it," Poon says.
Does all this have any effect on sales? And is there real money to be made here? Oddcast's eBay feature costs $3 a month, on top of a $10 monthly charge to use SitePal, which has 1,500 customers. "We're still struggling with analyzing the potential models," Sideman says. EBay's McManus also sidesteps the question of whether the company's investment in its developer program produces a tangible return. "We watch that, but it's fuzzy," he says. "There's a little crystal-ball factor in that. What's often more important than accelerating business is saving time." Amazon's Vermeulen, however, is unequivocal: "There's clearly been positive ROI," he says, pointing to increases in both the number of products sold on the site and shoppers.
There also are risks to opening the technology vault. EBay has to contend with a legion of "auction snipers," Web sites that automatically enter preset bids during the waning seconds of auctions.
Amazon and eBay know there's hard work to do to get the model and business rules right. But they show no sign of easing up on plans to become as much a destination for developers as they are a destination for shoppers.