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“Got kitesurfing on the mind, mixed with some search & classification tech, and a dab of political ranting”

Salesforce.com, the company that Microsoft should really worry about

Posted by direwolff on October 4, 2005

On the same day that Oracle announced its acquisition of Siebel, Marc Benioff, Salesforce.com's CEO, announced that his company was releasing their new AppExchange.

Ironically, Benioff makes the point that with the Siebel acquisition, Oracle seems to be doing the same in the client-server market, as Computer Associates did when they consolidated the mainframe market to suck out recurring licensing fees from customers still on that platform. Very interesting analogy indeed.

Over the past couple of years, Salesforce.com has slowly moved beyond simply providing their CRM application ("CRM" also being their stock ticker on the NYSE). They first enabled the integration of external applications from other vendors into their platform, then they enabled their customers to create customized applications leveraging their "on demand" platform, and now they're not only enabling any one (from independent software developers (ISVs) to enterprise software developers, to you or me) to create apps but they've created an eBay or iTunes (the analogies used by Benioff) like environment where developers can market and sell their applications to end-users (individuals or organizations). This is an important development that's worthy of serious consideration.

Basically, Salesforce is doing in the enterprise software marketplace, what Google could be approaching in the consumer application marketplace. While every one keeps suggesting that Microsoft is being attacked by Google, I believe Microsoft could have a lot more to worry about from Salesforce.com who has effectively abstracted the operating system away from enterprise software. Not only that, the longer that Salesforce.com is unimpeded in its march towards enabling hundreds and thousands of apps of ISVs the ability to get their offerings not only delivered quickly, but then also accessible by a large marketplace, the greater its advantage will be.

Benioff also makes some good comments about the "long tail" effects of having so many developers able to create apps for all sorts of different needs that would normally not be sustainable given the high transaction costs associated w/finding customers for these.

If we look at eBay as a marketplace analog here, we can see the effect of quickly establishing a reliable marketplace that all can rely on to service their needs. With both buyers and sellers that are well matched and search tools to enable them to find each other quickly and easily reducing transaction costs to make these matches. Further, the longer they're out there, the more experience they gain in managing the large server farms and maintaining the sort of performance standards required by industry.

So I posit here for a minute, what if Google were to acquire Salesforce.com?…hmmm…they don't really overlap in their product offerings, and if anything complement each other quite well. As well, Salesforce.com's market cap is only $2.6B, and Google just got $4B in cash…doh! All I have to say is that Microsoft better not sleep with both eyes closed at this point, as I believe the assault on its operating system is coming from both Google and Salesforce.com (at this point separate companies ;-), and could be very difficult to combat in the not-so-distant future.

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