What Siebel Is Building
But Siebel is building a piece of software, not a service. Lets be really clear about that. They are giving it to service providers around the world. And theyre going to ask them to host it and run it and compete against that little upstart company, Salesforce.com, who is doing over $100 million a year in revenue. We think that were still a very unique provider because were a service provider, not a software company. We run the service, we take responsibility for it, we keep it secure, we upgrade, we update. For example, when Siebel starts rolling out more service providers for CRM OnDemand and they roll out a new version, [when] they update and upgrade everybody, is everyone going to be on the same infrastructure? Do you know what the security regulations are at all these different things, or is every company going to have their own brand, their own Web site?But they already had a hosting relationship with IBM. This is a bit different from what they were doing before, dont you think? Its different because they give the software to IBM and in return they get 50 percent of all the revenues and IBM gets 50 percent of all the revenues. Thats the deal. IBM supplies the people and the hardware and the WebSphere, the DB2 and all that. And then Siebel provides the software product, CRM OnDemand, which they have not yet provided by the way. Theres no production customers on the product. So the idea is that they ship out to IBM and then IBM will run it. Well, while theyre working with IBM, theyve also announced that Sun is going to be reselling CRM OnDemand and also HP and theyre building products for them on their stack of CRM OnDemand. And then theyre going to sell it to Corio, USInternetworking, and Im making these names up now just as examples NTT, BT, Telefonica Italia, whoever and theyre gonna say, "Hey, why dont you guys set up your own data centers? You already have them. Buy some computers. Well give you the software, and you can become a hosting provider also. You can become your own Salesforce.com." That is a very different strategy from our strategy. Our strategy is were a service provider. Were like Amazon, were like eBay, were like Yahoo. We have our own proprietary stack of codeits open, its extensible, its customizable, its integrateable, its very feature-rich. If you look under the covers, youll find out what I said is exactly true. Theyve taken Siebel 7.5 and UAN, built an HTML interface on top of it. Theyre going to ship it to IBM, and theyre going to expect them to host it and run it and deliver user performance and scalability and security. And theyre going to do that with a lot of other vendors and a lot of other hardware types and their software product. And theyre going to recognize the revenue in terms of licenses, license revenue sold. Not subscription service. Because Siebel is not selling you the subscription. Its IBM. You just announced the AMD deal. Are you seeing a shift in your business away from the small-to-medium business space and the department level and into the large enterprise accounts? Were in a lot of large enterprise accounts now. Were closing a lot of large transactions. More than a third of our revenue is companies who have more than $500 million in sales. AMD is just one example. We have a lot of other significant customers like Cigna, who has 1,000 users on us, Nokia, who keynoted our conference, and many many other enterprises. Eagle Global Logistics gave a keynote, they have 850 users on us. These are companies who are basically spending a million dollars a year with us to manage their CRM online. So weve demonstrated small companies using our service and large companies. Next page: Focusing on dashboards.
Siebel wants to be an arms dealer, we want to be a service provider. We want to make the customer successful. That is our goal. Siebel wants to generate more license revenue. Their objective remains the same. Theyre totally different strategies. Siebel is not running their service. Theyve said that over and over again. Theyre making software, and they shipped it to IBM and IBM is running that out of their data center in Boulder, Colo.