News

Salesforce To Acquire Ruby PaaS Heroku

• By John K. Waters
• December 9, 2010

Salesforce.com CEO Mark Benioff sees Cloud 2.0 on the horizon, and he believes that Ruby will be its lingua franca. That's why his company wants to acquire Heroku, he says, a provider of a cloud-application platform for writing and deploying Ruby Web apps.

The two companies have entered into a definitive agreement for the acquisition, they disclosed this week. Salesforce will buy the San Francisco-based Heroku for approximately $212 million in cash. They expect to complete the deal in Salesforce's fiscal fourth quarter, which ends Jan. 31, 2011.

"The next era of cloud computing is social, mobile and real-time. I call it Cloud 2," Benioff said. "Ruby is the language of Cloud 2, and Heroku is the leading Ruby application platform-as-a-service for Cloud 2 that is fueling this growing community. We think this acquisition will uniquely position salesforce.com as the cornerstone for the next generation of app developers."

Heroku was founded in 2007 by Orion Henry, James Lindenbaum, and Adam Wiggins, three application developers. Their company's namesake platform is offered as a service for building, deploying and running cloud apps using Ruby. The platform's architecture includes tools for deployment and management, a runtime for scalability, fault tolerance, and an add-ons system for extending the capabilities of the platform.

"This acquisition should be seen in the light of Salesforce's desire to build a fuller platform," observed IDC analyst Al Hilwa, "much like its other initiatives with VMWare and Salesforce's own Database.com. Firms that provide a hosted platform for Ruby represent the kind of new application workloads that Salesforce hopes to attract to its own cloud offering. In theory, Heroku customers will be candidates for Database.com, and so the synergies for cross-selling are one of the main attractions."

Ruby is fast becoming the leading development language for social and mobile applications. The current list of marquee Ruby-based apps includes Hulu, Twitter, Groupon and 37 Signals. There are an estimated one million Ruby programmers currently coding, and industry watchers expect that number to climb to four million over the next few years. Heroku claims that more than 105,000 Web apps currently run on its application platform.

Benioff announced the planned acquisition during his company's annual DreamForce conference in San Francisco. "We've been somewhat myopic," he told conference attendees during his keynote presentation. "Customers have been telling us, 'You're too proprietary. You need to open up.' It started to get to me."

Heroku is one of two market leaders in the Ruby space. The other is Engine Yard, a four-year-old company also based in San Francisco. Salesforce's acquisition of Heroku makes Engine Yard an acquisition target, Hilwa said.

"Cloud platforms may be the new disruptive model," Hilwa said, "but they still need customers and applications. This [Heroku] acquisitions gives Salesforce a ready set of new-age applications written in Ruby that may be candidates to use Database.com or other assets they are building."

"This is one more move in the platform direction," he added. "It's about filling out the application platform offering. The idea is to create an integrated set of assets and cross synergies... It's interesting to see that the much hyped partnership with VMForce will not be the soul vehicle for bringing applications to the Salesforce.com platform. I think it confirms the current thinking that applications are more effectively provided as part of a fuller eco-system of other applications. Microsoft and Oracle already own stacks of technologies and have a relatively integrated application platform strategies to accompany them."