SAS versus Google

Mark Benioff from Salesforce.com has been warning the software industry that software is dead. 10 years from now, he will be correct. The way in which software is sold, distributed and serviced is going through a dramatic transformation, largely thanks to the efforts of Mark and Salesforce.com. The day of paying 5 to 7 digit licensing fees for a software package are going to disappear. Software as a service is the real deal. The flexibility of software tools in Java, .NET and OpenSource are allowing robust applications to be hosted, distributed and managed via the Internet. The giants in the software industry such as Microsoft, SAP and Oracle will continue to be the leaders in enterprise applications, although many of their customers will prefer a software as a service agreement over a license/maintenance package.

The real opportunity for SAS will be in small and mid-size companies. If a small company is looking for different software tools such as CRM, analytics, HR-management; they are more likely to forgo the hassle of getting the software and setting it up, unless it is brain-dead easy. Now with the SAS model, these customers can easily try before they buy and pay month by month with little investment and risk. AppXchange has become the central repository for SAS solutions.

At the same time, widget-companies using a free-software w/ Google Adwords revenue model have entered the game. Banking on the thought that customers will prefer free-ware, these Widget companies are utilizing a different distribution and revenue model than the pay-per-use SAS model. Typically these widgets are more light-weight and less mission critical than the SAS counterparts. The future of software will be interesting to watch. AppXchange, free Widgets and enterprise software companies will be the players. We will see continued productivity improvement in SMB businesses as they get to use tools that were previously unavailable, in turn allowing them to better compete with their larger competitors. The entire software industry will benefit as the pie expands with the inclussion of SMB and mid-size business customers.

TechCrunch believes that Google and Salesforce are about to announce a partnership. Could a Google acquisition of Salesforce be around the corner? It would be a good addition to Google's business, as Google would be able to exert control over the direction of AppXchange. With Google's reach and strength, Google can accerate AppXcahnge's software distribution leadership and be the defacto launching ground for new software tools and applications. There are pros and cons to a more powerful Google for both software publishers and SMB customers. Looking at Google's recent acquisition appetite, a Salesforce.com acquisition is definitely possible.