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A Leader in the Cloud Gains Rivals
By QUENTIN HARDY
Published: December 11, 2011
SAN FRANCISCO — For over a decade, Marc Benioff has had to listen to dismissals of the company he founded, Salesforce.com, as a marginal player in the business software industry.
But recently Salesforce has won the sincerest form of flattery known in tech: its competitors are spending billions of dollars to acquire firms that do the sort of thing it does, which is to offer business software as a kind of rental service using a cloud of computers inside the Internet.
Last Thursday, I.B.M. announced it would buy DemandTec, a cloud-based vendor of data analysis software for retailers, for $440 million. A week before that, SAP of Germany, one of the largest providers of traditional enterprise software, said it was paying $3.4 billion for SuccessFactors, which sells human resource software via the cloud. In October, the giant of traditional business software companies, Oracle, said it would acquire for about $1.5 billion RightNow Technologies, which uses cloud software for product research and customer service.
Mr. Benioff, the chief executive of Salesforce, is characteristically pleased with himself. “It’s great that Oracle and SAP are buying cloud companies,” he said, asking, “Do you think it will transform them?”
For Mr. Benioff, who co-founded Salesforce in 1999, the acquisitions are a vindication of his strategy. “Amazon Web Services is making over $1 billion in revenues with cloud software,” he said. “Google Apps is close to that. We’re on track for revenues of $3 billion in 2012. That is $5 billion, and that is what has them worried. Where are SAP, Microsoft, Oracle? Why haven’t they taken our customers?”
Much of the enterprise software industry, it’s true, has had a stagnant decade, and is looking for something new. Cloud is the new thing, but for many it means a big change in profits and how business is done.
Global spending on enterprise technology, forecast at $2.7 trillion for 2012, has been long dominated by corporate sales and use of personal computers tied to proprietary servers. The servers run software from SAP, Oracle and others that is sold to the companies as a licensed product, typically with large gross profit margins, then serviced for an even more profitable annual fee.
Cloud software is rented over the Internet at lower costs and margins. It is used by tablets and smartphones as well as PCs. The old giants, which arose by destroying the previous generation of mainframe and minicomputer companies, now face their own fight for relevance.
http://www.nytimes.com/2011/12/12/te...ref=technology
By QUENTIN HARDY
Published: December 11, 2011
SAN FRANCISCO — For over a decade, Marc Benioff has had to listen to dismissals of the company he founded, Salesforce.com, as a marginal player in the business software industry.
But recently Salesforce has won the sincerest form of flattery known in tech: its competitors are spending billions of dollars to acquire firms that do the sort of thing it does, which is to offer business software as a kind of rental service using a cloud of computers inside the Internet.
Last Thursday, I.B.M. announced it would buy DemandTec, a cloud-based vendor of data analysis software for retailers, for $440 million. A week before that, SAP of Germany, one of the largest providers of traditional enterprise software, said it was paying $3.4 billion for SuccessFactors, which sells human resource software via the cloud. In October, the giant of traditional business software companies, Oracle, said it would acquire for about $1.5 billion RightNow Technologies, which uses cloud software for product research and customer service.
Mr. Benioff, the chief executive of Salesforce, is characteristically pleased with himself. “It’s great that Oracle and SAP are buying cloud companies,” he said, asking, “Do you think it will transform them?”
For Mr. Benioff, who co-founded Salesforce in 1999, the acquisitions are a vindication of his strategy. “Amazon Web Services is making over $1 billion in revenues with cloud software,” he said. “Google Apps is close to that. We’re on track for revenues of $3 billion in 2012. That is $5 billion, and that is what has them worried. Where are SAP, Microsoft, Oracle? Why haven’t they taken our customers?”
Much of the enterprise software industry, it’s true, has had a stagnant decade, and is looking for something new. Cloud is the new thing, but for many it means a big change in profits and how business is done.
Global spending on enterprise technology, forecast at $2.7 trillion for 2012, has been long dominated by corporate sales and use of personal computers tied to proprietary servers. The servers run software from SAP, Oracle and others that is sold to the companies as a licensed product, typically with large gross profit margins, then serviced for an even more profitable annual fee.
Cloud software is rented over the Internet at lower costs and margins. It is used by tablets and smartphones as well as PCs. The old giants, which arose by destroying the previous generation of mainframe and minicomputer companies, now face their own fight for relevance.
http://www.nytimes.com/2011/12/12/te...ref=technology
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