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Salesforce.com goes mobile with first acquisition

SAN FRANCISCO, CA—Salesforce.com's acquisition of wireless software maker Sendia for $15 million in cash, announced last week, is a small deal by industry standards. But it's something of a milestone in the rapidly evolving software-as-a-service (SaaS) market segment. Not only is it the San Francisco-based hosted-CRM vendor's first acquisition, it's one of the very few such deals ever made by an on-demand provider.

"We haven't seen much M&A activity yet in this space," says CRM industry analyst Rob Bois, research director at AMR Research. "I think that's because this kind of acquisition presents some unique and daunting challenges. Among other things, you must have a very good cultural alignment between the companies, including similar services-oriented views of the world. In this case, Sendia already worked on top of the AppExchange platform, so all of its customers were also salesforce.com customers. Basically, they were already in the right paradigm, which I think increases the probability of success."

Launched earlier this year, the AppExchange is salesforce.com's platform and marketplace for third-party, on-demand applications. Santa Monica-based Sendia's assets will become a new service on that platform, re-branded as AppExchange Mobile, which will allow developers to distribute their software to hand-helds and cell phones without extensive recoding.

"Our vision is to create once and run everywhere," salesforce.com CEO Marc Benioff told reporters at the press conference announcing the launch. "Developers can build applications once and then publish them to AppExchange and AppExchange Mobile. They can deploy the apps on laptops, Windows Mobile or Palm devices."

Making it easier for software developers to create mobile versions of their applications and to distribute them to mobile devices "without a lot of heavy lifting" is the key to this announcement, Bois says.

"The knock on SaaS, even as recently as a year ago, has been that it's very rigid," says Bois. "It has been seen as a kind of a lowest-common-denominator delivery platform. If you needed to do any integration or customization, you were just out of luck. Salesforce.com has been changing that perception by adding customization capabilities. And now they're adding the mobile piece."

Salesforce.com has been partnering with Sendia to use its Salesforce Automation (SFA) solution since 2004. Consequently, all of Sendia's 79 customers are salesforce.com customers as well.

"This was an obvious move for salesforce.com," says analyst Neil Macehiter, research director at Macehiter Ward-Dutton. "Sendia was an existing salesforce.com partner, the one with whom Sendia had seen the greatest success, so this is a very good fit."

This acquisition also underscores the growing demand among enterprise customers for easily customizable business apps that can be delivered to mobile devices, Macehiter says.

"Salesforce.com wants to control what it sees as strategic aspects of the on-demand proposition," he says, "rather than relying on partnerships for increasingly critical elements, such as this mobile-delivery capability. I could see salesforce.com looking to acquire identity management capabilities (it currently partners with Sxip Identity), which could be exploited within AppExchange. Such moves are indicative of a company that is positioning itself to become a strategic supplier to its customers."

Salesforce.com still has about 14 wireless solution partners that it expects to continue working with, despite the Sendia deal. The AppExchange Mobile service is currently offering about 60 applications.

To date, salesforce.com customers have developed and installed 7,100 applications through the AppExchange service, according to the company, including HR applications, payroll apps, expense reporting tools, and a range of industry-specific applications. .

Access to AppExchange Mobile is priced at $50 per user per month, plus any access charges from mobile operators. Access is free for customers who subscribe to the AppExchange Unlimited Edition.

About the Author

John K. Waters is a freelance writer based in Silicon Valley. He can be reached at john@watersworks.com.

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