The upstart poster child for on demand, software-as-a-service has been salesforce.com, in part due to the vision, evangelism and trash talking of its CEO Marc Benioff. In the on demand CRM space, salesforce.com competes against the likes of Oracle/Siebel Online, NetSuite, RightNow, SugarCRM and Microsoft's forthcoming entrant, but for now two of the SaaS business software crowns, revenue generation and subscribers, belong to WebEx.A WebEx Salesforce.com combo isn't the most outrageous merger idea ever floated...
Unlike salesforce.com, WebEx has been less volubly pioneering SaaS with its Web conferencing services, and integrating its services within enterprises as well as with Web presense services, such as instant messaging from Yahoo and AOL. Now the company appears ready to expand into new areas, including salesforce.com's CRM turf and office applications, such as calendaring and email.
In terms of customers and subscribers, salesforce.com has nearly 17,000 customers over 300,000 subscribers; WebEx has almost 13,000 customers and over 2,000,000 subcribers. As many as 50,000 meetings a day, on average, take place over the WebEx MediaTone Network, WebEx President and COO Bill Heil told me over lunch last week. He also cited a report from Frost & Sullivan, published in May, that puts WebEx's share of the worldwide web conferencing services market at 67 percent, four times greater than its nearest competitor, Microsoft's Live Meeting.
WebEx's revenue per subscriber is substantially less the salesforce.com's. Salesforce generated $71.9 million in revenue for its second quarter, which ended July 31, 2005, a 77 percent increase from the same quarter last year, when it reported revenue of $40.6 million. WebEx's second quarter 2005 revenues were $75.3 million, a 23 percent increase from $61.1 million in the second quarter of 2004. WebEx's third quarter revenue was $78.6 million, a 23 percent increase from $64.0 million in the third quarter of 2004. Salesforce.com's third-quarter revenue numbers come out on Wednesday, and will likely close the gap with WebEx.
WebEx hopes that its recent acquisition of Intranets.com will move the company beyond Web conferencing. Intranets.com has about 300,000 subscribers for its small business demand business software, which includes document sharing, group calendaring, task management, a database, discussion forums and contact directories. Last month WebEx launched WebOffice, which combines Intranets.com and WebEx real-time collaboration features into a single subscription.
"We are going to push hard on WebOffice metaphor, which has 300,000 subscribers, and expand it to th WebEx base of users, Heil told me. The goal is to have 2,000,000 users of WebOffice by mid-2006, he added. Given that two-thirds of WebEx customers use it for sales related activities, it's natural to add CRM capabilities. WebEx does partner with Salesforce.com, integrating its Web conferencing with the saleforce.com platform, but Heil said that the company is considering adding its own sales force automation and other sales capabilities and even enteprise-level e-mail via OEM, buying or partnering. WebEx could partner with or acquire any number of smaller companies developing the new class of Web applications and suites for office productivity. Even Microsoft is getting into the game next year with Office Live, which includes email and Web site hosting, project management, CRM, file sharing and other features.
WebEx has a strategic advantage over companies like salesforce.com with its global network, WebEx MediaTone Network, which delivers 200 millisecond response time and 99.998 uptime for real-time presense, video, VoIP, document sharing, billing and provisioning, according to Heil, who came to WebEx via Tandem/Dec/Compaq. The company has eight data centers around the globe and 36 blade clusters. "We have expertise in real time, and spent the last year turbo charging the network," Heil said. "Benioff might find out how hard is it to provide real-time [collaboration]."
Perhaps, but at some point real-time network services will become more of commodity, just CRM is beginning to judging by the number of entrants. Salesforce.com will continue to build an extensible application service platform to attract a developer and partner community. WebEx will continue to build out its real-time platform and collaboration services, and add more Web applications to its suite. And the two, as well as every other on demand player, will try to figure the most opportune and least risky path to expansion. A WebEx/Salesforce.com combo isn't the most outrageous merger idea ever floated...