NEWS ANALYSIS: Salesforce.com and Amazon Web Services are notable for growing rapidly into multi-billion dollar cloud computing enterprises. But that's where the similarity ends.
Over the last two weeks, I went to the two ends of the cloud spectrum. In Las Vegas it was the Amazon re:Invent conference. While Amazon doesn’t release revenue figures for Amazon Web Services, the best-guess estimate of $4 billion per year is the agreed upon range among market analysts.
In San Francisco, it was Salesforce.com’s Dreamforce where the company had just reported its first ever $1 billion quarter and projected that it was on its way to generating $5 billion in revenue for the year.
So, the two companies are cranking along at $1 billion a quarter and setting a pace that competitors are racing to match. While the revenue figures are close, that is where the similarity ends.
Amazon Web Services is the leader in cloud infrastructure capable of hosting customers ranging from the tiny, but capacity-hungry digital movie producer to Netflix, which consumes huge chunks of Internet bandwidth every day. AWS designs and builds its own capabilities and applies the parent company’s strategy of high volume but thin margins to the infrastructure business.
Salesforce has grown through acquisition and by offering applications as a software service. Its cloud applications are centered around the sales, service and marketing functions, but they are more like a basket of loosely connected products than services designed from the ground up to work together.
Those disparate services were often purchased by individual departments outside the CIO and corporate capital budgets. The Salesforce1 platform introduced Nov. 19 amid great fanfare will require support from corporate rather than merely divisional managers. Salesforce went out of its way to parade customer CIOs talking about how Saleforce1 was the unifying platform for which they have longed. But there are a lot of questions left to resolve.
While the need to move to a mobile-based platform is evident to anyone who has watched crowds moving about staring at their smartphones, the next step for Salesforce has to be updating the applications running on that platform.
In demonstrating the new platform it was evident the sales and marketing applications still reflect an older model. Those services, and the ones from newly acquired ExactTarget in particular, digitize and mobilize the traditional funnel based model of customer acquisition and sales.
However, customers are becoming less interested in being nurtured and having content pushed at them and more interested in controlling their own privacy and deciding when they want to signal interest in products and services.
Allowing users to understand and enforce their own privacy controls would go a long way to building customer loyalty. Location-based marketing, services pushed to a user’s device and digital trophies and rewards are bumping up against privacy concerns propelled in part by a public concerned about government surveillance lead by the National Security Agency.
Aside from a brief mention or two about two-factor authentication, privacy was hardly mentioned in the keynote introducing Salesforce1. While the theme was the Internet of Customers, I was left with the impression of customers being treated as targets of opportunity rather than socially engaged consumers anxious to have sales made at their own pace rather than a piece of a quarterly sales quota.
The era of connected things is upon us now. People who contend that it will take a long time for a sensor-based economy to unfold need to take a moment to consider the six or more sensors already present in their smartphones.
What is less clear is how vendors will gear up their platforms to manage the “Thing,” networks which can represent hundreds of times of additional network traffic coming their way. To its credit, AWS got ahead of the curve by unveiling its Kinesis platform aimed at gathering those huge data streams and pushing the data into real time analytical engines.
The cloud economy is fluid with partners becoming competitors and vice versa. Salesforce.com returned Hewlett-Packard’s loyalty to its sales platform by offering an HP-powered instance of the Salesforce service. But whatever happened to that motto "no software," and by extension—no hardware?
It looks like Salesforce needed to create a unified platform for its services. The next step is to make sure the services offered on that platform are indeed what customers really want.
Eric Lundquist is a technology analyst at Ziff Brothers Investments, a private investment firm. Lundquist, who was editor-in-chief at eWEEK (previously PC WEEK) from 1996-2008 authored this article for eWEEK to share his thoughts on technology, products and services. No investment advice is offered in this article. All duties are disclaimed. Lundquist works separately for a private investment firm which may at any time invest in companies whose products are discussed in this article and no disclosure of securities transactions will be made.