One analyst claims Salesforce.com's future is in jeopardy due to rivals such as Oracle, VMware and Red Hat beating the company's SaaS suites with virtualized software systems.
Salesforce.com (NASDAQ:SFDC) may be performing well in
the enterprise software market now, but at least one analyst fears for
the software-as-a-service provider's future with rival enterprise giant
Global Equities Research analyst Trip Chowdry claims that
prospective customers see limitations in the multi-tenancy architecture Salesforce.com
used to put itself on pace to earn $2 billion in revenues this year. This view,
cultivated with the help of some 450 enterprise customers and 10 CIOs, is
causing some to look at a virtualized approach espoused by Oracle and its
forthcoming Public Cloud solution.
Unveiled at Oracle OpenWorld Oct. 5, the
offers applications, middleware and database software hosted and
managed by Oracle. The Public Cloud also includes social networking software on the front end.
"Customers we spoke to find Oracle's architectural
approach to be superior to that of Salesforce.com as it provides a better
isolation and control environment vs. Salesforce.com," Chowdry wrote in a
research note Oct. 30.
Moreover, Oracle will launch Web-based enterprise apps covering
customer relationship management (CRM), human capital management (HCM)
network tools. Salesforce.com does not truck in HCM, which Chowdry said
reduced enterprise wins for the company versus Oracle.
Also, Oracle's cloud database is likely to be superior to
Salesforce.com's Database.com offering, given its decades of experience
in the space. Chowdry explained that Oracle has access to source
code and has optimized the database all the way from the chip level to
cloud level to provide more efficiency.
Oracle isn't the only player competing with
Salesforce.com. Chowdry noted that VMWare's Cloud Foundry and Red Hat's
Open Shift are all picking up momentum at the expense of
Salesforce.com's own platform-as-a-service (PaaS) offering of
Force.com and Heroku.
"These competitive challenges may reduce
Salesforce.com's win-rates, lengthen sales cycle and put margin pressure
resulting in multiple compression," Chowdry said.
to comment on Chowdry's report, in which the analyst reduced his estimates for
the company's next two fiscal years and downgraded his price target for Salesforce.com
to $95 for the next 12 to 18 months.