With Kieden Acquisition, Salesforce.com Is On A Roll

A few weeks ago I participated in a detailed conversation with some fellow Irregulars centered around Salesforce.com's (CRM) AppExchange. It was a detailed and varied conversation featuring many different perspectives.

At the time, I wondered whether AppExchange was as much a chance for salesforce.com to outsource R&D and cherry pick tuck-in technologies (and people) as it was about driving near-term revenues and creating a platform.

Today, salesforce.com validated my assertion by acquiring Kieden. Kieden is a very cool little company that I had the chance to see firsthand at the SfDC AppExchange Seminar in New York (for a detailed review of that meeting, check out Mark's writeup). Kieden was one of several AppExchange partners highlighted in a presentation that revolved around the power of enterprise mashups and how easy it was to build compelling new services by simply tying together SfDC's API with other available metadata (like Google Maps and Google AdWords).

SfDC is re-branding the Kieden solution as Salesforce for Google Adwords (see online demo). The Kieden solution allows salesforce users to create and manage their AdWords campaigns directly from SfDC. You can then automatically track leads (i.e., click-throughs) all the way through deal closure. Imagine the power of a sales rep knowing that the customer he just signed was a direct result of a specific keyword placed on the Google network? Or imagine the power of a marketing executive seeing in real-time which keywords are leading to closed deals versus which ones are generating click-throughs from unqualified leads (which could in turn be turned off and spending could be redirected to the high throughput campaigns).

Interestingly, SfDC is planning on charging for this service on an organizational basis...the tear sheet suggests $300 per organization per month. If SfDC can make this pricing stick, it will help ASPs and set a precedent for further monetization of the AppExchange.

This is the second time in the last few months SfDC has brought an AppExchange solution in-house (Sendia is now salesforce Mobile Edition). For a company I've taken to task in the past for their de minimous R&D spending, I have to tip my cap to this model as it truly does enhance the SfDC development ecosystem in an efficient manner.

SfDC has been on a roll of late, reporting a blockbuster quarter (see conference call transcript) that blew past analysts expectations and put to rest some of the concerns that emerged in the prior quarter.

CRM 1-yr chart:

Note: At the time of this writing I, and/or funds I maintain discretionary control over, maintained a long equity position in CRM but did not maintain a short position in any company mentioned. We also may, at times, carry derivative options on underlying positions as a hedge.

Comments

[Doug Karr:]

Seems to me that Salesforce is simply 'riding the wave'. They are in an industry that is (finally) growing and they just happen to be at a good place at a good time. Microsoft CRM appears to be making tracks and could actually surpass Salesforce due to the flexibility of the application and it's ability to integrate on site or be run as a Service. I'll be curious to see how the CRM market share develops over the long run.

2006 Aug 27 05:57 PM