Sunday, February 25, 2007

Salesforce's big win, bigger hype

Businessweek and ZDNet's Larry Dignan report that Merrill Lynch is the latest mystery customer that is signing up for 25,000 subscriptions. The price for subscription is $500 per user per month. Now, if Merrill Lynch actually were to pay this price, they would be down $150 Million a year. That would be more than 25% of Salesforce.com's annual revenue.

The reality is perhaps the 25,000 subscriptions are at a very heavy discount (90%+), or only a subset of the 25,000 subscriptions are for the "Financial Adviser" edition and the rest are vanilla Salesforce.

On vanilla, here is a question: Is vanilla same as plain? Isn't vanilla a flavor? As in Plain Yogurt vs Vanilla Yogurt? When did Vanilla loose its status as a differentiator?

What do you think? About vanilla? Or Salesforce?

2 comments:

Hero Hiralal said...

The 25K mark is a big win not just from the revenue perspective (it does contribute big enough, if not significantly big), but also from a perspective of brand equity and marketability. Salesforce now has crossed a chasm of sorts into the large enterprise, replacing in-house enterprise-wide systems, thereby posing a direct threat to the Siebels of the world. Establishing this kind of scalability on a hosted model is not just a boost to Salesforce, it's a validation for the whole SaaS market itself.

Anshu Sharma said...

I agree that a big win like this certainly helps Salesforce and the move to SaaS in general. And this is true even if the revenue associated with this deal is small. I was simply pointing out that the simplistic reporting elsewhere pointing to the $500 price was devoid of critical analysis. In all, this is a good thing for SaaS.