Predicting the end of Salesforce?

Fellow Irregular, Joshua Greenbaum has posted this excellent note entitled Siebel 2.0: The end of Salesforce, and it follows up on an earlier post by Phil Wainewright How is AppExchange really doing? I recommend you to check both of these out.

Here is a quote from Josh:

The parallels (with Siebel), unfortunately, regarding Marc’s claims for App Exchange, his one strategic ticket out of his current mess, are a little too similar. Marc has been making lots of exaggerated claims about App Exchange, the value of the VC money that has been thrown into App Exchange, and other issues regarding how well his company is really doing. I’ve written some about this, others like Phil Wainewright have weighed in, and a few more in the blogosphere (Sinclair Schuller in particular) have also noted the credibility gap that Marc is building for himself.

In my not so humble (and probably biased) opinion, the following are the key flaws of Salesforce's current strategy:

• The move from SMB to Enterprise helps them target some big fish but in the medium to long run they end up competing with Enterprise software experts.
• Along the same lines, the move to Enterprise results in bringing on-board the DNA of large enterprise software companies and thereby destroying the innovator's edge.
• AppExchange technology is new, untested and despite the best marketing it takes many years, sometimes decades to build out a real platform.
  
• No VC I know would bet their company's future on another company's future success as a platform. The law of conditional probability and risk management principles makes it an unattractive move. This is not to dispute that some companies are glad to have free 'ads' posted on Salesforce's website.
  

None of this is to say that some niche players are not building customized screens and integrations to Salesforce but that is true for all applications that are somewhat successful, be they on-demand or otherwise. By way of example, check out the solutions page for most AppExchange vendors like Business Objects and you will notice that they have integration solutions for SAP, Oracle, Siebel, PeopleSoft in addition to Salesforce.

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