Zoho Fires At Salesforce But Without Ammunition

August 6, 2009

I did a post yesterday characterizing Salesforce.com as the old guard of the software-as-a-service industry.

It highlighted arguments that Salesforce’s reliance on commercial products (EMC storage and Oracle’s database) create higher than necessary costs. In contrast, companies such as RightNow and Zoho rely on infrastructure built with open-source components.

Zoho claims a cost advantage over Salesforce, but offers no customer numbers to back up its argument

Zoho claims a cost advantage over Salesforce, but offers no customer numbers to back up its argument

In particular, I quoted from a strident diatribe Zoho CEO Sridhar Vembu posted on the company’s blog. Salesforce’s inefficiencies cause it to charge customers $65 a month instead of Zoho’s $15.

Vembu also pointed out how Salesforce had been running a 50 percent off promotion. “They must really believe this can keep customers from defecting,” he wrote. “I can tell them it is not working.”

Unfortunately, Vembu offers no proof backing up his claim – making his huffing and puffing appear quite pointless.

After reading his allegation, I shot off an e-mail asking him how many CRM customers he has and what percentage of them are paid. Vembu wouldn’t say. Here’s what Marisa Lam wrote on his behalf.

“Because we are a private company we don’t disclose specifics about number of customers (paid or free).”

Without figures to back up his allegations, they appear quite hollow. It is a little like George Bush claiming there are weapons of mass destruction in Iraq. I’m sure customers see through the smoke screen, too. So what’s the point in puffing out your chest if there is nothing to show?

1 Comment | news | Tagged: , , | Permalink
Posted by Mark Boslet

Salesforce Described As Old Guard Of The Software Industry

August 5, 2009

When a company is first in a market, it becomes a target. This appears to be what has happened to Salesforce.com, the startup that pioneered the software-as-a-service model.

A decade ago, Salesforce launched an attacked on the then old guard of the software industry (Oracle, SAP, Microsoft). It steadily built a business renting its software over the Internet instead of selling products customers install in-house. Quarterly revenue is now over $300 million.

After dismissing SaaS (for years), Oracle, SAP and Microsoft all mounted their horses and raced to develop offerings of their own.

The same rules of engagement are now turning against this leader.  Software industry experts have begun asking whether its reliance on proprietary and expensive components (EMC storage gear, the Oracle database) creates a disadvantage when competitors, such as Zoho and RightNow, rely on open source

Zoho is quick to say yes. CEO Sridhar Vembu argues the differences create a “fundamental inefficiency” for Salesforce. This inefficiency is stubbornly reflected in the $65 a month price it charges, Vembu says in a recent blog post. Zoho charges $15, which includes a necessary mail account.

A CRM price promotion from Salesforce. Does it point to inefficiencies?

A CRM price promotion from Salesforce. Does it point to inefficiencies?

Maybe that is why Salesforce resorted to a $50 percent off promotion, he adds. “That gap, or may be I should call it the Grand Canyon (in price) is exactly what you have to resort to when you have a fundamentally inefficient business model that precludes you from dropping your price the honest way,” he says.

He could be right. While this disadvantage may take months, or perhaps years, to show up in business results, it is likely something Marc Benioff and crew are mulling. It is one thing to stay ahead with features and AppExchange partnerships. It is another to have cost on your side.

Leave a Comment » | news | Tagged: , , , | Permalink
Posted by Mark Boslet

Beta Of A Free Version Of Office Coming Soon

April 1, 2009

Microsoft will shortly complete an early version of a free Office product, a top company official said Wednesday.

The software giant has acknowledged previously that it would eventually deliver an edition of Office supported by ads.

Microsofts free Office will be ad supported, says Stephen Elop

Microsoft's free Office will be ad supported, says Stephen Elop

But Stephen Elop, president of Microsoft’s Business Division, said working beta code would arrive in “not a long period of time.” He did not provide a precise date.

The announcement came during an on-stage interview at the Web 2.0 Expo in San Francisco. It came as he repeated Microsoft’s claim that software such as Office would both exist in cloud and installable versions, despite the trend toward software as an online service.

“We’re going through a period of disruption,” he said. But both versions will deliver value to users, he said.

1 Comment | news, software, web 2.0 | Tagged: , , , , | Permalink
Posted by Mark Boslet

Salesforce Claims Win Over Oracle As Customers Surrender To Cloud Computing

February 25, 2009

Business customers are rethinking the large software “maintenance” payments they make to vendors such as Oracle and SAP, Salesforce.com CEO Marc Benioff says.

Salesforce winning in every industry, says Marc Benioff

Salesforce winning in every industry, says Marc Benioff

Benioff, whose company posted a 34 percent fourth quarter sales increase, said the downturn is causing many companies to watch cash like hawks.

“Now that credit is as tight as it has been in generations, customers are surrendering to the more predictable costs of cloud computing,” he said Wednesday on a conference call.

“We’re winning deals of all sizes in virtually every industry,” he said.

The company’s solid financial report, with profits that almost doubled and an upbeat first-quarter outlook, bucks the trend of recently quarterly reports with sales declines and falling profits.

Benioff said the sour economic environment is leading customers to the lower monthly payments of renting software as a service.

He pointed to a key contract win with EMC, where he claimed the company is replacing Oracle’s Siebel customer software.

“This was a great win against Oracle and replaces their Siebel infrastructure,” Benioff said.

1 Comment | news, software | Tagged: , , , , , , | Permalink
Posted by Mark Boslet

Startup Boasts World’s Largest Enterprise Software As A Service Web Site

December 16, 2008

Aravo Solutions will announce this week $7 million of new funding that despite the sour economy will let it hire sales, service and engineering staff.

Half a million suppliers use the site, says Tim Albinson

Half a million suppliers use the site, says Tim Albinson

But the more inspiring news from the San Francisco startup might be this: it boasts the world’s largest enterprise software-as-a-service Web site, which it built for General Electric. Half a million suppliers use the site to feed information on products, themselves and compliance issue to GE, with thousands of new suppliers joining each day, says Tim Albinson, founder and CEO.

Aravo is a supply-chain company that claims its can take cost and complexity out of a customer’s relationships with its suppliers. For the eight-year-old startup of between 50 and 60 workers, taking on the GE project “was a big deal,” says Albinson.

It took 5 months to sell GE on the effort and seven months to implement the technology – a “tremendous amount of work and effort,” he says.

The $7 million in financing brings to $30 million the amount of money Aravo has raised. The series D round was led by Charles Schwab/Big Sky Partners and included Stephen Friedman, a retired chairman of Goldman Sachs, and Tony Mayer, a former CEO of JP Morgan Capital.

1 Comment | software, startups, venture capital, web 2.0 | Tagged: , , , , , , , | Permalink
Posted by Mark Boslet

Gaming Market Readying For Big Shift: Games Must Become Online Services Instead Of Retail Products

December 6, 2008

If the video game industry is to prosper over the next five years, it will need to follow the lead of business and consumer software and turn itself into an online service.

Todays business isnt attractive, says Lars Buttler

Today's business isn't attractive, says Lars Buttler

That may mean learning to survive on subscriptions, advertising and the micro-payments players shell out for in-game extras – instead of retail sales. And it may hinge on attracting a broader audience than the 18 to 35 year old males who are today’s typical gamer.

This was the prescription from “Gaming: The New Frontier,” a conference sponsored by the SDForum and designed to look ahead. Several gaming executives said they saw promise in games for mobile devices, such as Apple’s iPhone. Other said the industry needed to concentrate on fewer, better titles.

But most agreed big changes were necessary. “Quite frankly, right now the business is not particularly attractive,” said Lars Buttler, founder of Trion World Network, a startup building server-based games for online play. “The future should be software as a service: games as a service.”

Today, the gaming market is saturated with shrink-wrapped products, some not so good, others big budget titles that only the largest developers can afford to produce. While games allow players to compete against each other online, synchronizing play is difficult because the games are running on separate PCs or consoles instead of a central server.

People must move from packaged products, says Anne-Marie Roussel

People must move from packaged products, says Anne-Marie Roussel

“People have to move from this packaged goods stuff,” said Microsoft’s Anne-Marie Roussel, director of strategic and emerging business. “Gamers more and more want to be social.”

Building a server-based game puts competition on a level playing field, Buttler pointed out, since the server coordinates play. It also allows games to be updated and changed more easily, and makes collecting data about game play simpler.

In addition, hundreds or thousands of players can participate, instead of scores.

“We believe that’s the answer to where we are going,” said Buttler.

Leave a Comment » | computers, software, startups, Video Games, web 2.0 | Tagged: , , , , , , | Permalink
Posted by Mark Boslet

Follow

Get every new post delivered to your Inbox.

Join 32 other followers