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Mark Benioff,

Wags in the technology industry used to poke fun at Marc Benioff and his pint-sized startup, Inc. No more. Benioff, 38, hasn't changed his shtick. He's the same in-your-face marketing whiz who grabbed attention by setting up pickets bearing "End of Software" signs outside events sponsored by rival software giant Siebel Systems (SEBL) Inc. But he and his four-year-old company can no longer be dismissed by Siebel. That's because Benioff, more than anyone else, is demonstrating to corporations that buying software delivered as a service over the Web is a viable alternative to software packages that can cost hundreds of thousands of dollars and take months or years to install. For other software companies, he shows that they can make money selling software as a service.

The proof is in his company's results., a San Francisco-based seller of services for managing sales forces and a company's customer service, posted revenues of $21.6 million in the second quarter, double those of a year earlier, and logged its second sequential quarterly profit. It is the first corporate software-as-service outfit to make a profit. "This is a new way of selling software. We have a huge obligation to prove that the model works," says Benioff.

Software giants are being forced to respond -- including Siebel. Analysts say the company is working on its own software-as-service offering to counter Benioff's, though Siebel won't comment. You know what they say about imitation and flattery....

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