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Salesforce.com Ups the Ante

In old-school video games -- and, we gather, in most new ones -- there are levels of play. You get past one, and your reward is a whole 'nother one, as we'd say back in Texas, that's even more difficult to conquer. There's not much time for celebration moving up the ladder of success. Well, that's what business is like these days for Salesforce.com, in case you were wondering just where this was going. (We're not gamers here at RCPU, but your editor did spend a few months working for a company that makes video games.)

Salesforce.com, of course, has been highly successful and a darling of the trade press. As a vendor of hosted customer relationship management applications, Salesforce.com has conquered the first few levels of the software (or "no software," in Salesforce.com's case) industry. Great. Now, things get harder.

They get harder because, as we've known for a while, the big players in the software industry -- namely Microsoft -- are waking up to software as a service and prepping hosted offerings that will compete with Salesforce.com's impressive CRM wares. And we all know what usually happens in this case. The innovator, or the metaphorical rabbit in the market race, either gets consumed (bought) or chewed up and spit out (kicked to the curb, Netscape-style) by bigger competitors.

Salesforce.com's CEO Marc Benioff knows all this and, at this point at least, he doesn't seem to be aiming for the Holy Grail of acquisition and the good life as a wealthy pseudo-exec. No, admirably, he seems to want more -- to keep conquering the levels of the game until Salesforce.com becomes more than just a hit upstart.

At his company's show this week, Benioff positioned Salesforce.com not just as a niche hosted-CRM competitor but as a company offering a whole development platform -- boldly named Force.com -- for hosted applications. As far as we (or anybody else) can tell, nobody has tried the development-platform-for-hosted-apps approach before. And consider Benioff's quote in the BusinessWeek article linked here:

"We're a platform company, not just an applications company. We have a vision for the future of an industry."

Those don't sound like the words of a guy who's ready to sell out or quit on his vision. That's good -- because too many innovators now want nothing but the big payout that acquisition by a mega-company brings. And while we have nothing at all against the normal course of industry consolidation, we do understand that acquisition can (although it doesn't always) stunt or even snuff out innovation within companies doing some really interesting stuff. Just look what Salesforce.com's success has brought forth -- a hosted CRM application from Microsoft that, if they know how to handle it, could be a boon for partners. It often takes a mouse to make the elephant jump, and the quickened pace of innovation that results is good for partners, users and the industry as a whole.

Now, whether Benioff and his charges can conquer the next level of the game -- the one in which Microsoft and SAP enter the picture (the "Bosses" of the level, perhaps) -- is another issue altogether. But we're glad to see that he's still playing, and we'll be looking over his shoulder as Salesforce.com takes on all comers.

What's your take on the impact of SaaS? Are your clients showing interest in hosted applications? Let me know at lpender@rcpmag.com.

Posted by Lee Pender on 09/19/2007 at 1:21 PM


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