Food Fight!

Meanwhile at the Delta Tau Chi house  .. two Irregulars, Josh Greenbaum and Jason "Woodrow" Wood are arguing about the shrinking violet called Marc Benioff.

Jason calls Josh a curmudgeon - which would typically mean I should line up with Josh. But I am squarely with Jason on this. Because Jason looks at an economic angle, whereas Josh sticks to integration and technology issues.

To compare salesforce.com to Siebel is to compare a Southwest seat to a BA flat bed.  Every day  Southwest  flies over 250,000 passengers. BA flat bed capacity on a daily basis on its 747s and 777s is less than 7,000. Southwest average passenger trip is 800 miles. BA's long haul around 5,000 miles. BA's average long haul ticket costs, by my estimate 25X that of average Southwest ticket.

salesforce.com is going after a much larger, more cost sensitive SME market than did Siebel. Offering a "flat bed" to this market is overkill. If anything the bigger vendors have to react to salesforce.com price points of under $ 100 per user a month.

The other thing Josh does not factor is Southwest started off life as primarily a Texascarrier. Today it flies to 63 cities in 32 states. When you have a decent business model, customers help you  expand. Customers will take salesforce.com beyond CRM - but at its own pace. Not to get to be an SAP overnight. Especially when SAP has to rip out its "flat beds." Get its TCO down from over $ 1,000 per user a month to under $ 100.

I think I know who will have more turbulence the next few years. Food will be flying around, but  it will not be much fun.

Comments

[David Scott Lewis]

Great analogy, Vinnie. Salesforce.com can reach markets that Siebel never could, although Salesforce.com will see a slew of competition from other SaaS and hybrid players. They should fear Sugar (or a Sugar clone) more than Siebel.

[Joshua Greenbaum]

Disagreeing with one's fellow curmudgeon is the truth path of the curmudgeon.

So here I go:
I think the comparison between SEBL and SFDC is still valid, insofar as I contend that SFDC is now the one threatened by competitors that can usurp its strategic position in the market, much like SFDC did vis-a-vis SEBL a number of years ago. That was one of the main reasons I compared the two companies -- not because they have similar products or business models but because they occupy (or occupied) similar strategic positions in the market relative to their competitors -- positions that I believe are comparable with respect to SFDC's vulnerability.

[Tom Greenberg]

You are not comparing apples to apples! Siebel's revenues are mostly from installed solutions, and less than 100k seats are on-demand (Thanks in part to the acquisition of Upshot on-demand), whereas Salesforce.com revenues are 100% from on-demand licenses.

Salesforce.com should be worried more about the smaller players such as Netsuite, Salesboom.com, RightNow, Entellium, etc before they expand further as over 200 million dollars were generated by these smaller rivals in 2006.

It's in Salesforce.com's best interest to wipe out all these smaller players by acquisition or else soon, before they either become big or get acquired by Oracle, SAP,, Microsoft or others.

[vinnie mirchandani]

Tom, were you addressing to me? you are making my point. Josh was comparing sfdc to siebel and I was arguing the comparison is not valid...