Microsoft Chairman Bill Gates sent a memo last month alerting his executives to the dramatic changes facing the software business. Two days earlier, Chief Technical Officer Ray Ozzie, who is leading the services push, outlined the challenges as he saw them in his own memo. In it, Ozzie asked, "How can we utilize our extant products and our knowledge of the broad historical adoption of forms-based applications to jump-start an effort that could dramatically surpass offerings from Quickbase to Salesforce.com? In response, Salesforce CEO Marc Benioff sent this memo to his employees.
From: Marc Benioff
Sent: Wednesday, November 09, 2005 8:58 PM
To: All Salesforce.com
Subject: The Business Web
Today, I woke up to read on the front page of the Wall Street Journal
how Microsoft is reorganizing to take on companies like Google and
Salesforce.com--building a new generation of products called Microsoft
Live.
And just last week, Bill Gates gave a speech about the end of software
that could have been a page out of our play book. His rhetoric sounding
as it was he who was picketing software companies and calling for "The
End of Software"--our mantra since 1999.
The speech was an amazing bracket to his famous Tidal Wave speech on
December 7, 1995 about how Microsoft would own the Internet. But over
this 10 year span, what has Microsoft done for business on the Web
besides cloning a slow browser? The answer: nothing.
For example, Microsoft says one day that customers in our industry
should upgrade from Microsoft CRM 1.2 to Microsoft CRM 3.0 (they lost
2.0 on the way), and, unfortunately, the two versions are not compatible
with each other--customizations will not upgrade, they have different
user interfaces, and they require lots of different Microsoft software.
It's an old Microsoft game that ends in failure for customers, but
generates their mafiaesque upgrade revenues.
The next day, Microsoft has a new version called "Live." It's the new
on demand offering that will not be compatible with the current product
line. So, perhaps they should rename their entire Microsoft software
product line, Microsoft Dead. It's the analog to Microsoft Live, the
new on demand offering that does even exist.
What is going on? This is a time of seismic shifts in our industry.
The internet is disintermediating the status quo, and old models of
software cost and complexity are being replaced with new models of
affordability and ease of use.
Last month, our number one competitor surrendered, and decided to take
its place beside several former competitors at software's Shady Pines
Rest Home, also known as Oracle. It was a merciful outcome for
shareholders, but a time of con"fusion" for customers.
The software industry is going through a transformation that is unlike
anything it has seen in two decades, and the emergence of the PC itself.
This transformation goes by many names: On-Demand, Web 2.0, Software as
a Service. But they all point to the same conclusion: The era of the
traditional software "load, update, and upgrade" business and technology
model is over. It is time for "The Business Web."
New Internet-based companies are showing how services will replace
software for both consumers and corporations. Sand Hill Road venture
capitalists are no longer funding software companies; they are only
funding service providers.
Exciting new companies have emerged like Salesforce.com and Google who
have real businesses that can challenge and win against the old guard
companies, and are. Customers love these new services, and are finding
tremendous success as never before.
A new range of start-ups are showing how this is just the beginning of
the business Web--that there are new technologies coming to replace
traditional word processing, spreadsheets, and other staples of business
with Internet services. Companies like Writely, Numsum, Zimbra, and
Goffice are breaking Microsoft's hypnotic trance that the Microsoft
Office, and its myriad of clients and servers we are installing today,
it is simply a dinosaur.
Would these companies have existed ten years ago? Five years ago?
Probably not. But, new widely-accepted technology standards, like Ajax
and others, make them possible, and consumers and businesses impatient
with the current pace of change at Microsoft make them necessary.
Just as mainframe companies struggled for relevance in the client-server
era, Microsoft finds itself in a worse position today facing not just
the obsolescence of a technology model, but a business model as well.
They have no position today in the business Web, for example.
Now is our time to demonstrate the next level. New technologies like
AppExchange, Mirrorforce, and our Winter 06 release further demonstrate
the next generation of the business Web, and we will all continue to
lead this important movement.
Aloha,
Marc
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