When it comes to the business of selling technology, two immutable facts emerge: Past is prologue; and it's always personal.
Just ask Larry Ellison and Henning Kagermann, the stars of the latest and, some might say, most vicious revival of an age-old tale that's been told and re-told throughout the history of American commerce.
This time it's SAP and Oracle.
Before that it was Microsoft and Yahoo for search. And quite some time ago, it was Apple and IBM for PCs. The names change but the storyline remains largely the same: No. 1 and No. 2 channel all their rage and resources toward destroying each other, oblivious or indifferent to an emerging competitor that's soon to kill them both.
And while SAP and Oracle continue to slug it out for the lion's share of the estimated $30 billion-plus that companies spend for business applications and services each year, Salesforce.com's software-as-a-service (SaaS) (define) model is propelling the company to record sales and earnings.
Worse for SAP and Oracle, the on-demand applications provider is not just winning in the small- to mid-sized market, but it's also winning contracts for large installations in head-to-head battles with both rivals and, in some cases, landing subscription deals with some of their largest and most lucrative clients.
"The competition continues to struggle with how to build, sell and deploy multi-tenant shared solutions," Salesforce.com CEO Marc Benioff said during an Aug. 15 conference call announcing the company's second-quarter results. "The appeal to customers is undeniable. But for entrenched legacy vendors like SAP, Oracle and Microsoft, to truly adopt this model is unthinkable."
Benioff, who might be even better at needling competitors than his former boss, Ellison, said Siemens, SAP's largest European customer, chose to go with his company for its customer relationship management (CRM) (define) software in the second quarter and added "of course, we already have their largest global customer, Dupont. That's amazing."
He said Salesforce.com landed the largest customer account in its history -- a yet undisclosed international financial services firm with more than 35,000 subscribers -- at the expense of Oracle. It also doubled its subscriber deployment at Cisco Systems (Quote), a legacy Siebel account, and beat out Oracle for a "large opportunity" at American Express (Quote).
An Oracle spokeswoman declined to comment on Salesforce.com's customer wins in the second quarter. In an e-mail to internetnews.com, SAP spokeswoman Lindsey Held wrote "we are focused on our customers, not competitive claims."
The strong second quarter and impressive customer wins aside, Salesforce.com still casts a relatively small shadow over SAP and Oracle. In the quarter, it earned $3.7 million on sales of $176.5 million. It's now projecting sales of between $727 million and $732 million for the fiscal year. Meanwhile, SAP pocketed $2.5 billion on sales of more than $12.4 billion in its most recent fiscal year while Oracle earned $4.3 billion on sales of $18 billion.