Sites like MySpace and Yahoo!'s Flickr (Nasdaq: YHOO) allow millions of people to organize content via ratings, tags, and other collaborative features. Why not do the same for corporate data? That's Salesforce.com's (NYSE: CRM) new strategy, and the main reason for its purchase of Koral for an undisclosed amount.
Last September, Koral CEO Mark Suster demonstrated his company's product for me. Unlike traditional content management systems, it had no file folders. Instead, Suster dragged files onto a website, then tagged them with descriptions. He showed how users could subscribe to get content updates, search the database, and even rate the content.
Content management software is a big business. IDC pegs the market at about $3.6 billion a year, with major players including IBM (NYSE: IBM), EMC (NYSE: EMC), Open Text (Nasdaq: OTEX), and Oracle (Nasdaq: ORCL).
They're all trying to solve Corporate America's pain of managing bewildering amounts of unstructured data, including spreadsheets, presentations, Web pages, emails, videos, MP3s, and more. Even companies that manage to keep track of all this data must also take steps to enforce its regulatory compliance.
Using Koral's technology, Salesforce.com plans to launch products that help companies not only manage content, but also build their own custom applications. Salesforce.com will announce pricing later this year.
While Salesforce.com is growing revenue at more than 60% per year, the company needs to find large markets to keep up the momentum. Based on what I've seen with Koral's offering so far, Salesforce.com has an attractive go-to-market strategy for content management. With a user base of nearly 650,000, Koral's products could be a nice growth driver over the next couple years.
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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 2,719 out of 25,386 in CAPS. Yahoo! is a Stock Advisor pick. The Fool has a disclosure policy.
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