Five Companies Shaping Cloud Computing: Who Wins?: Page 3

Salesforce: An Early Leader Holds its Position

The plucky and unabashedly self-promoting Salesforce can claim first-mover status in the software-as-a-service world. Founded in 1999, it gave legitimacy to the once radical idea that enterprise applications would be delivered from a Web site.

One of its rallying cries is “The End of Software,” that is, applications are now valued only for the services they provide – all of which are available online – and we should dispense with our troublesome installed apps.

Salesforce’s sales tracking and account management software (CRM software) has been a clear success. As of 2008 the company claimed north of 50,000 customers. Extending on this, the company’s AppExchange, launched in 2005, offers a library of third party software (office productivity, finance, marketing, etc.) that customers can incorporate into their Salesforce mix.

Now it’s aiming for a much larger goal: Salesforce wants its programming platform to become the default choice for businesses and developers that create applications.

In the same way that programmers who code apps for a mass audience often choose Microsoft’s .NET, programmers who create cloud-based apps will choose the Salesforce development platform – or so Salesforce hopes. The company’s application platform, Force.com, was unveiled in September 2007. (The cloud keeps generating new acronyms; Force is referred to as Platform as a Service, or PaaS.)

If the company’s development platform were to become the leading choice it would give Salesforce a huge long-term advantage, but actually achieving this will be an astounding feat. As cloud computing moves from emerging idea to a mainstream choice, history suggests products of smaller players don’t become the default choice. (Salesforce’s market cap is $3.3 billion, as opposed to Amazon’s $22 billion or Google’s $102 billion.)

Then again, Salesforce’s development environment is ideally suited for the cloud’s future, says Rebecca Wettemann, an analyst with Nucleus Research. Indeed, she points to the company as the ultimate winner in the cloud battle.

“Rather than just thinking about the technology, they’ve really put in place the whole ecosystem to deliver: developer kits, testing, sand box, developer ecosystem, a way to monetize applications,” she says. “There are a bunch of things that make a new software developer or even an existing developer very attracted to the Salesforce platform.”

And though it’s a smaller company, Salesforce has what any serious cloud player needs: a network of datacenters. It has datacenters in the U.S. and in May 2008 announced that it would build its first international center, in Singapore.

The company’s strategy makes great use of partnerships. Its newest initiative, Service Cloud, leverages its partnership with Google, Facebook and Amazon to enable businesses to create – here’s the magic phrase, circa 2009 – a social networking community to aggregate/explore/influence customer response to their products.

Despite all its success (or maybe because of it) the continual buzz about Salesforce is about which large company will acquire it. The chatter is all speculation, as CEO Marc Benioff maintains the company is not for sale. But even as you read this there are stock traders eyeing Salesforce’s share price and guessing when it’ll get snapped up.

Below you’ll see the traffic for the Salesforce.com Web site, which has remained consistent over the last year (but realize that traffic to the site isn’t exactly reflective of app usage):

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IBM