This is my second post in the series Looking Back 2010 where I plan to highlight some of the significant cloud related events in 2010. These year end picks are based on my observations of the industry over the past one year. In today’s post, I am going to talk about my second pick, the acquisition of Heroku (see previous CloudAve coverage) by Salesforce.com (see previous CloudAve coverage). Even though consolidation among different players in a market segment is normal in any industry, this particular acquisition has the potential to be a game changer. I will put forward my arguments in support of this claim in this post.
First, some history
In the beginning of this month, at Dreamforce 2010, Salesforce.com announced its acquisition of Heroku for $212 Million in cash. Before this announcement, Salesforce.com was an enterprise SaaS player with a proprietary Force.com platform which didn’t get much traction beyond some of their hardcore supporters. One of the biggest FUD against PaaS (even though it is partly true) is the fear of vendor lock-in. A proprietary platform like Force.com was seen by developers as a risky bet. They didn’t want to be tied to a platform where their future is dependent on the whims and fancies of the platform provider. Even though Salesforce.com was doing well on their SaaS side, their platform strategy left much to be desired.
While the traditional platform providers were clueless about their cloud strategy, we saw the emergence of platform players around Ruby and other modern languages. Heroku and Engine Yard are two such players who took Ruby to the cloud and completely changed the way developers did their apps. They made it so easy and seamless that even my grandma with rudimentary programming skills could deploy her apps on the cloud. Not only these providers made deploying apps seamless, they also built their service on top of openness mantra. Developers could take the apps deployed in these PaaS environments and put it in the traditional environment and vice versa. Openness is key to the success of modern day platform players like Heroku, CloudBees and others. These PaaS providers started to disrupt the platform services market and made app development more democratic.
Why this acquisition is significant?
I have already written about the importance of this move by Salesforce.com. At the risk of being repetitive, I will briefly touch upon the importance of this move again in this post. From the tone of Marc Benioff’s keynote at Dreamforce 2010 and from my interactions with many in the organization, it now appears that they have realized the limited potential of a proprietary platform. They have also realized that the only way to get developers attention is by embracing mainstream languages. This has resulted in Salesforce.com wanting to build (well, own) not just an open platform but, also, support many developer friendly languages.
The first step was their VMforce strategy to bring Java developers on board. Even though it was a good start, they had their task cut out. They had to do something that could get developers comfortable with Salesforce.com brand. The net result is the opening up of their database as a service and the Heroku acquisition. By letting database.com open to any platform, device or service and by showing their intention to keep Heroku independent (as a side note, Heroku homepage still doesn’t have Salesforce.com name anywhere), they are signaling developers to trust their platform strategy. If whatever I heard during Dreamforce 10 are true, this is just a beginning and they have other plans under their belt to build open and democratized PaaS offerings. If Salesforce.com is going to go in this direction, Heroku acquisition will be the turning point not just for Salesforce.com but for the PaaS market itself.
One more thing
Again, this move holds promise based on Heroku’s potential, their openness and Salesforce.com’s stated intention to democratize PaaS. As of now, Heroku has more than 100K apps deployed on their platform but they are not making enough revenues to justify the cash they received. Moreover, we have only heard Salesforce.com’s intentions to be open and democratic and we haven’t seen it in action yet. Whatever I have pointed out in this post is entirely dependent on Salesforce.com keeping its promise of openness and finding a way to monetize Heroku platform successfully.
- News Analysis: Salesforce.com Buys Heroku For $212M – Shows Commitment To Next Gen Apps (constellationrg.com)
- PaaS choices today (enterpriseirregulars.com)
- First impressions: Salesforce.com far outgrows its name (constellationrg.com)
- Impression from Dreamforce 2010 (enterpriseirregulars.com)
- Salesforce’s Database.com as a game changer – now they’ve acquired Heroku? (constellationrg.com)
- Salesforce.com’s $212 Million Acquisition of Heorku – A Sparkling Gem In Radiant Future Of Cloud And PaaS (cloudave.com)
- Research Report: 2011 Cloud Computing Predictions For Vendors And Solution Providers (enterpriseirregulars.com)