February 28, 2007, 8:12 AM — Everyone knows Salesforce.com Inc. as the company that pioneered software as a service (SAAS) and survived the dot-com bust when many other application service providers (ASPs) didn't. Now, Chairman and CEO Marc Benioff said the company is ready to take on Microsoft Corp. as a leading development platform provider, a strategy he unveiled as "Salesforce.com 2.0" in New York on Tuesday.
Promoting its hosted application infrastructure as a platform for application development is not a new strategy for Salesforce.com, but the company seems to be turning up the volume on the message. At Tuesday's event, Benioff unveiled a new hosted application for the financial services industry, called Wealth Management Edition, and an increase in users from 5,000 to 25,000 at customer Merrill Lynch & Co. Inc.. But he also used the event to vigorously promote the company's transition from an ASP to a hosted application platform for partners.
As the company approaches its eighth anniversary next month, Benioff said it's important that Salesforce.com think about achieving its first-decade goals over the next two years. Becoming a hosted platform for other ISVs -- many of whom don't have the financial resources to build applications on their own -- is at the top of the list, he said.
"That's very much what we're doing today when we talk about Salesforce 2.0," he said. "Our vision started with our killer applications -- a whole new way to deliver enterprise software. Next we had very successful customers ... [then] it moved to the developer community to add on to that and then it really got into a platform to give our customers and developers the ability to extend these products and create new products on the same infrastructure."
Benioff described how Salesforce.com set up a collocation facility in San Mateo, California, for companies that need application infrastructure. There are 32 ISVs in the facility now, with a waiting list for when the company expands the project, he said.
This kind of facility, combined with the ability for ISVs to build applications on Salesforce.com's Apex platform for free will drive the company's success as a platform provider, Benioff said. ISVs will be able to post those applications on Salesforce.com's AppExchange directory and sell them on its AppStore.
The transition from being a straight SAAS provider to having all these new offerings can be confusing, said Laura Lederman, an analyst with William Blair & Co. in Chicago. Pulling it all together as a cohesive platform under the Salesforce.com 2.0 moniker should spur wider understanding and adoption by customers, she said.
Moving into the platform space will put Salesforce.com directly in the path of its favorite nemesis, Microsoft Corp. Benioff, outspoken as usual, said Microsoft's model of still requiring customers to install their own software instead of hosting it on the Web is "really screwed up." He said he tried to update his computer to Windows Vista but was unsuccessful because it was too complicated.
Benioff also insisted Salesforce.com has no desire to compete with its partners -- something for which Microsoft has been criticized -- even as it ventures into the vertical hosted applications space.
"We want to foster competition on the AppExchange," he said. "If we build a [customer] recruiting application, we want other people to do that, too. We want the best [applications] to rise to the top."
