Salesforce's Chatter Joins a Growing Social Media Fieldby
Salesforce.com (CRM) Chief Executive Marc Benioff has never been shy about trying to piggyback on other companies' momentum. On Nov. 18, he did it again through the introduction of a business collaboration tool that takes a page from the playbooks of social networking Web sites Facebook and Twitter. Salesforce plans to begin selling the new software, called Chatter, in February. Chatter will work with Salesforce's core customer relationship management software, used by sales teams to track leads and deals. The new product will be able to display "profiles" of employees and posts about projects they're working on or the customers they've visited. "Collaboration is becoming a big part of how our customers will work," Benioff says in an interview at the company's Dreamforce conference in San Francisco. Salesforce plans to let current customers run the software at no extra cost and charge a monthly $50 apiece for new users. Facebook and Twitter have popularized tools that let users post regular status updates, sharing thoughts, whereabouts, and other information. "I know more about these strangers on Facebook than I do about my own employees and what they're working on," Benioff said during a speech at Dreamforce. "I know when my friends went to the movies, but not when my VP of sales visited our top customer." Market Getting CrowdedBy trying to borrow some of those techniques, Salesforce aims to make its software more useful to customers and to expand its basket of products as businesses rein in tech spending and place fewer software orders. Salesforce, which is expected to reach $1.3 billion in revenues this year, is trying to expand beyond the customer-management software that's been its bread-and-butter. Benioff says Chatter can make Salesforce's software more integral to companies' operations. Chatter can show alerts from business applications made by vendors including Oracle (ORCL) and SAP (SAP), letting workers keep tabs on sales progress or customer service problems recorded in those systems. Useful as collaboration tools may be, the market is getting crowded. Microsoft (MSFT) claims more than $1 billion in annual sales for its SharePoint Server, which lets work groups share files and work together online. IBM (IBM) has a product called Atlas that works with its Lotus e-mail software and lets workers identify experts on topics inside their companies in a social network. And Google's (GOOG) recently introduced Wave offers business users the ability to share information and hold conversations on the Web. Future Sales Worry AnalystsSalesforce's plans came a day after the company released financial figures that left some analysts concerned about future sales. On Nov. 17, it reported fiscal third-quarter sales of $331 million, exceeding analysts' consensus expectation of $324 million. Earnings of 16¢ a share matched forecasts. The company also raised its sales and earnings projections for fiscal 2010, which ends in January, and now expects sales of about $1.29 billion, vs. previous guidance of $1.27 billion to $1.28 billion. It also raised its earnings forecast to 62¢ to 63¢ a share, from 60¢ to 61¢. But Salesforce also reported a decline from last quarter in deferred revenue, a gauge of future sales that measures revenue collected from customers but not yet booked on the income statement. On Nov. 18, shares of Salesforce slipped 3%, to 63.61. Patrick Walravens, an analyst at JMP Securities (JMP), who has a market outperform rating on the company's stock, said in a Nov. 18 research note that the stock "should provide excellent returns to investors" if Salesforce can expand from 68,000 customers to 150,000 in the next several years while maintaining the average revenue it brings in from each one. By expanding its software capabilities and trying to entice companies to sign contracts for more workers, Salesforce's release of Chatter is a small step in that direction.