The platform: It's most tech companies' Holy Grail. Microsoft's
Salesforce.com develops customer relationship management (CRM) offerings and delivers them via the Internet. To expand beyond this category, the company built AppExchange, allowing third-party developers to create their own array of on-demand applications for human resources, surveys, e-learning and so on.
Now, with Platform Edition, partners no longer have to purchase a license to Salesforce.com's CRM product. Instead, they can leverage Salesforce.com's powerful on-demand system to build their own custom applications, paying the same standard $50 to $100 per-person monthly fee that's already earned Salesforce.com years of strong recurring revenue. AppExchange and the Platform Edition are fairly unique in the software world, making it tougher for rivals such as Microsoft, Oracle
"This was an important move, because it should encourage more application development," said Martin Schneider, senior analyst for enterprise software at the 451 Group. "It allows Salesforce.com to be similar to a hosting provider as well."
On-demand applications have created a massive market opportunity. According to a report from Deutsche Bank, the market for on-demand software may reach $30 billion by 2013. While building this platform is certainly an ambitious move for Salesforce.com, the company has demonstrated that it knows how to follow through, and that it has a ripe market waiting.
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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. Microsoft is an Inside Value pick. The Fool has a disclosure policy.