Salesforce.com (NYSE:CRM) recently announced its FY Q4 2011 earnings in which it mentioned that its Chatter application is gaining traction making the company the largest provider of enterprise social networks in the world.  Chatter is an application that provides social networking and real-time connection features for enterprises. We believe Salesforce.com could use Chatter to expand its enterprise customer base and up-sell its more valuable cloud-based products like its customer relationship management (CRM) software and Force.com. Salesforce.com competes with SAP (NYSE:SAP), Oracle (NASDAQ:ORCL), Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM) in the CRM software market.
Below we will take a look at some of the comments made by the management on Chatter during the earnings conference call. We maintain a $116 price estimate for Salesforce.com stock, which is about 6% lower than market price.
Management bullish about Chatter and its prospects
According to management, the Chatter application has gained faster adoption with 80,000 of its 92,300 paying customers deploying Chatter since its release in June.
This makes Salesforce.com the largest provider of enterprise social networks in the world. And now with Chatter.com, the free and viral version of the service, we’re looking to introduce the power of the cloud to employees at every company around the world.
As you know, Chatter is at the heart of our efforts to lead the enterprise into Cloud 2. We see social computing as a strategic new enterprise category, which is why this year you’ve seen us deliver Chatter, Chatter Plus, Chatter Mobile, Chatter Free and, at the Super Bowl, Chatter.com
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Chatter helping enterprises with productivity gains
The advantage that Chatter has over other social networking sites like Facebook and Google (NASDAQ:GOOG) Buzz is that it provides additional security and privacy features. Having an enterprise related social network on the same platform as Salesforce.com’s other tools will improve productivity and communication.
According to the management:
Customers using Chatter tell us they’re thrilled of the productivity gains and the open communication it brings to their organizations. In a recent survey, we commissioned more than 6,000 global Salesforce.com customers. Users reported 28% fewer medians, 33% less email, and a 49% increase in finding information after deploying Chatter. Those are amazing statistics.
Customers that have deployed Chatter within our sales and service clouds also have shown higher log in rates and higher usage rates as their employee spend more time and do more work within our applications. These are amazing results from a technology that is literally just months old. We are so delighted to see such strong results from the Chatter technology.
DimDim acquisition to enhance Chatter capabilities
We discussed about how DimDim acquisition will enhance Chatter capabilities in our earlier note titled Chatter Network Can Help Salesforce.com Up-Sell Other Cloud-Based Products. The company will likely add web-conferencing capabilities to the Chatter application presumably in the form of a browser-based web conferencing platform based on an open-source platform (and would not require the installation of any software).
According to the company:
Dimdim brought us technology we will use to immediately accelerate the development of Chatter, adding vital communication capabilities such as screen sharing, messaging and presence, to mirror the proven Facebook models combining communication and collaboration into an integrated service.
Disclosure: No positions