Salesforce.com, best known for its cloud-based CRM package, announced on Monday that it would be providing web hosting services for web sites, intranets and web-based applications. The announcement comes on the heels of Microsoft's coming out party for its cloud computing services platform called Azure last week at the Professional Developer's Conference. But Salesforce, much like Amazon is building this business as a logical extension of its existing business. It's already running a server farm infrastructure for Salesforce, so it only takes some minor tweaks to move into the hosting business.
Microsoft, Salesforce, Amazon: Oh My!
Suddenly three very formidable players have gotten into the hosting business. What does this mean? First of all, it means that mainstream enterprise computing is going to be getting increasingly comfortable with conducting business in the cloud. Although there has been a lot of FUD spread lately by the likes of Larry Ellison and Richard Stallman (as I wrote about in Does Using Gmail Mean You're Stupid), the fact is that these announcements mean that we will see a further shift of enterprise applications to the cloud, these complaints not withstanding.
Last week at The Web 2.0 Conference in Berlin in a video called Web 2.0 is Not Dead, Tim O'Reilly defined the concept in the simplest terms: "Web 2.0," he said "is the shift to the network as the platform and that is not changing."
As more computing moves to the cloud, it fulfills O'Reilly's view of the network as the platform, whether that's for consumer applications like Gmail or more sophisticated services such as web hosting or accessing Microsoft applications like Sharepoint and Exchange as services. Meanwhile, you have to wonder (at least I do), how long will it be before Google gets in the hosting business. After all who has a bigger infrastructure than Google and it would make a lot of sense for the company to provide hosting services to its customers, even while exposing Google Apps in a similar way that Microsoft is exposing its apps to customers.
Can Anyone Actually Make Any Money?
That's the key question and it's hard to see these services as anything more than a loss leader for these companies, or at the very least, a very minor part of the revenue stream. Although neither Microsoft nor Salesforce have released pricing schemes yet to my knowledge, if you look at what Amazon charges, you are talking about a pennies on the dollar proposition. Nobody is going to get rich providing commodity computing services, that is for sure, but perhaps it provides another foothold for Salesforce (and Microsoft) to lock in the customer base to the host company's service offerings.
Paul Silverstein, EVP at TPS360, an executive recruiting and consulting company believes that Salesforce will attract customers looking for a proven commodity. "Salesforce.com has been a standard model of success for the SaaS Business Model. Technology firms, wanting to leverage Salesforce.com's proven expertise and platform architecture, will select Salesforce.com with the expectation that businesses can focus their investments on revenue and customer acquisition rather than 'the plumbing that makes it work,'" Silverstein says.
Whatever happens with this, it's all part of a growing cloud computing environment. That Salesforce, one of the earliest adopters is getting on board with hosting services is yet another way it can add value to its growing platform of offerings. When you have the 10,000 pound gorilla that is Microsoft suddenly getting in the game, and cloud competitor NetSuite cutting prices, it only makes sense that Salesforce would be looking for a way to provide additional value and give customers another reason to stay with them. Web hosting gives them that and gives you an interesting choice for your business' web hosting requirements.