Diversity to Grow

By John Pallatto  |  Posted 2005-07-29 Print this article Print

The report also suggests that Salesforce.com create a new revenue model that ensures that it can make enough money from being a platform provider for third-party applications when these partners have no need to pay for using Salesforce.com core CRM applications. Generating this revenue could make Salesforce.com less attractive as an application platform or application incubator for ISVs. To read more about how Salesforce.com is enhancing its products to serve as an ISV application platform, click here. Salesforce.com has grown remarkably since it was founded six years ago. It now claims more than 267,000 customers at more than 15,500 companies. It has a market capitalization of $2.5 billion and generated $176 million in revenue in fiscal year 2005.
But the fact remains that it has built an expandable platform to support what is essentially a niche application market–CRM. Siebel Systems is the cardinal example of what frequently happens to a company that ties itself to a single market segment in the software industry–it stagnates.
The biggest and most successful industries are those with the most diversified product lines, whether they developed those products themselves or acquired them from other companies. Microsoft, IBM, Oracle, SAP, Symantec, Cisco–and this list goes on–all fit this profile. Salesforce.com may have an advantage in that it can buy out the best applications that its partners develop on the platform. But whether Salesforce.com can rival what Microsoft, Google and eBay have done to build dominant market platforms seems quite a stretch at this point. There is a fundamental difference between what Salesforce.com is doing and what these three giants have accomplished. Their platforms serve fundamental market needs, whether it is a PC operating system, search technology or auctions. While customer service and marketing are essential functions for any company, theyre still not mass-market items that virtually any consumer could use. The fact remains there are a lot of CRM products out there sold by many companies, some of them much bigger and richer than Salesforce.com. Click here to read about how Customforce 2.0 will give ISVs new tools for building business logic into applications. To really succeed in the vision that Summit Strategies has conjured up, Salesforce.com has to go way beyond its fundamental identity as a CRM platform to become a universal on-demand application development and deployment platform. Microsoft Windows has held that distinction for the best part of two decades in the field of shrink-wrapped, proprietary software. On-demand software as a service has to become the dominant distribution model in the industry for Salesforce.com to have any chance at all of becoming one of those giant industry leaders. Microsoft, Oracle, SAP and many others will have something to say about that before it comes to pass. John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. He can be reached at john_pallatto@ziffdavis.com. Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.

John Pallatto John Pallatto is eWEEK.com's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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