Beating Gates at his game

comment ZDNet's Dan Farber finds out from Marc Benioff why he thinks Salesforce.com can upend Microsoft as a platform provider

commentary Earlier this week, I attended a Salesforce.com event at the tony Four Seasons Hotel in San Francisco, where CEO Marc Benioff previewed once again the forthcoming June 8 edition of his company's products and showcased Sforce 6.0.

Clearly, Salesforce.com wants to become more of a development platform for business and enterprise resource planning, or ERP, applications. So how will Benioff manage that transition? In a brief on-camera interview, I asked what he views as Salesforce's biggest challenge--a question that's particularly au courant, given the company's now operating in an area that's traditionally been dominated by the likes of Microsoft, Oracle (plus PeopleSoft, J.D. Edwards) and SAP for decades.

Benioff talked about delivering an on-demand platform, including tools, applications and user interfaces to access information. In particular, he said, Microsoft was trapped in a failed client-server model that may have been great in the early 1990s, but not the 21st century.

I don't know why he isn't thanking Microsoft for being half asleep at the wheel.

Off camera, Benioff continued to castigate Microsoft for failing to deliver on the next wave of innovation. Actually, I don't know why he isn't thanking Microsoft for being half-asleep at the wheel. He owes part of his good fortune to the fact that Microsoft's been too busy trying to do too many things at once--including its draining and sundry legal battles.

Benioff continued on his winding path toward answering my question, taking aim at Bill Gates' competitive streak. Gates, he said, has variously spoken about taking down Google co-founders Sergey Brin and Larry Page in much the same way he took down Philippe Kahn. As you may recall, Kahn was the founder and CEO of Borland Software. He made the mistake of going up against Microsoft in the business applications business in the 1990s and got creamed.

Suffice it to say that Gates and company will saddle up and try to crush any competitor in a market that Microsoft thinks it should "own."

If you look at how Microsoft addressed the Netscape browser situation with Internet Explorer (we are waiting to see how Microsoft deals with Firefox), Benioff can't get too comfortable thinking that Microsoft has become impotent. Nor can he assume Microsoft now lacks the capability to innovate and won't turn its heavy weapons (and checkbook) against Salesforce, if so moved.

Benioff did spend the formative years of his career working for the ultimate high-tech competitor, Oracle CEO Larry Ellison, and he knows about how far his rhetoric can carry him.

Longer term
For the time being, however, Salesforce is competing with the next generations of Microsoft Office and SAP NetWeaver, not Siebel Systems or Microsoft CRM. But if you look closely, here's the interesting part: All of the companies see their respective futures as technology platform providers.

Microsoft is trying to turn the rich (or fat) client Office suite into a business application development platform with custom XML schema, InfoPath, more open APIs and other technology such as a workflow engine (now in development). But so far, we haven't heard much about turning Office into a hosted application service, in part because masses of customers aren't demanding it.

That is a temporary situation. Microsoft has to be looking at how to deliver hybrid Office solutions that allow customers to have rich or thin (Web) clients, hosted applications, modular components and a single "Longhornish" data model.

Benioff got in a few competitive jabs, but he understands that while he may have won the first round, it's a 10-round fight at the very least. In the next round, Salesforce should retire its "No Software" slogan. The company's motto suggested that you don't buy software, you buy

The Salesforce.com name is as retro as Benioff claims Microsoft is.
a service. That was fine for the first few years, when Salesforce was an upstart and desperate to garner attention. But now the slogan is just a confusing artifact.

From the customer perspective, Salesforce, NetSuite, RightNow, Siebel and others are simply offering hosted software applications and tools over the Internet. No software? Then what is the stuff running in the browser window operating on the data? And how about a name change?

The Salesforce.com name is as retro as Benioff claims Microsoft is. How about simplifying to Sforce, which would still be different from the company's CRM stock ticker symbol?

But these are minor marketing issues. Finally answering my question on how to compete as a platform provider, Benioff said that what's important is "adding more subscriptions and growing with customers themselves." That means broadening far beyond out-of-the-box (or server farm) customer resource management and sales force automation to build an ecosystem teeming with applications that can be derived from the data, APIs, Web services and tools that Salesforce provides.

If you are keeping score, it should be easy to see if Salesforce achieves success in subsequent rounds. The ecosystem metrics are transparent--how many subscribers, customers sites, developers, partners and applications.

So far, Salesforce has been moving fast. Benioff claims that the company's June rollout will be the 18th edition of the product in the six-year history of the company. For the next few rounds, the company will have to pick up the pace even more.

 

biography
Dan Farber is a senior vice president at CNET Networks.

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