Salesforce CEO: Private cloud is not real cloud

Companies hosting private cloud architectures don't benefit from economies of scale that "real" cloud offers, says Marc Benioff.
Written by Victoria Ho, Contributor

SINGAPORE--The private cloud model is not real cloud computing and vendors selling private cloud hardware are merely using the cloud to rebrand their offerings, according to Salesforce.com CEO Marc Benioff.

"Beware of the false cloud. The false cloud is not efficient," said Benioff during his keynote speech at the company's Cloudforce conference here Tuesday.

Salesforce.com's 77,000 customers run on 3,000 servers spread over three data centers globally, he said, adding that, theoretically, 77,000 companies of varying sizes would require at least 100,000 servers to run their CRM (customer relationship management) systems.

The ability to deploy on just 3,000 servers translates to an equivalent output at only 3 percent of the infrastructure needed because of economies of scale--a delivery model that company-owned infrastructure cannot replicate, he said.

Benioff's statement echoed that recently made by an Amazon Web Services executive, Andy Jassy, who said internal cloud infrastructures do not carry the same value propositions as cloud computing and still require companies to dedicate staff and power costs to maintaining a data center.

Benioff also touched on Salesforce.com's Cloud 2 line of services, which include a Facebook-like social network for enterprise customers it calls Chatter. The interface pulls in data from sources such as Twitter and is aimed at giving customer service and sales reps an interface similar to the social networks they are familiar with.

He added that companies are missing service requests from users because they are ill-equipped to deal with new sources of information with their "outdated" software, and named competing collaboration offerings Microsoft SharePoint, Lotus Notes and Oracle Siebel as examples.

Cloud more appropriate for Asia
Speaking later during a media session, Benioff said the cloud's "pay-as-you-go" business model is more attractive to users in Asia compared to traditional software because the region's emerging markets are much more price-sensitive.

He was contrasting the cloud model against traditional onpremise software, which requires companies invest in hardware to maintain it and renew software licenses when they upgrade.

Correspondingly, the company's business in Asia is the fastest-growing segment for Salesforce.com, he said. The company added 400 new customers in the first quarter of 2010 to its overall tally of 7,400 in the Asia-Pacific region. Its revenue in the quarter also grew 55 percent over the same quarter last year.

Its regional customer base of 7,400 companies, however, makes up less than 10 percent of the company's global count. Benioff, though, disagreed that Asia is taking longer to get on the cloud bandwagon and reiterated that the region is "hungry for change" in their IT deployments.

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