NEW YORK (TheStreet) -- Salesforce.com (CRM) CEO Marc Benioff is trying to pull off one of the greatest tricks in tech, convincing customers he has the platform of the future while at the same time trying to build it.
Salesforce.com has long sold itself as "cloud," and had its system ranked among major cloud vendors. This despite the fact it runs, and has run, on Oracle (ORCL) all this time. Nothing dishonest -- "cloud" didn't exist as a thing in 1999, when the company was founded.
By renting its Oracle-based software as a service, on its own hardware, CRM delivered value for money. As the cloud metaphor emerged, first from Yahoo! (YHOO) and Google (GOOG), then through Amazon.Com (AMZN) to Rackspace (RAX), CEO Benioff saw he was delivering the end result of cloud -- applications you rent and host elsewhere -- way ahead of the pack.
But Oracle client-server is not a cloud. Real cloud services cost a tiny fraction of what Oracle charges for the software and hardware needed to host scaled applications. As Oracle CEO Larry Ellison recognized this and began developing his own cloud strategy, Benioff saw it would be natural for Oracle to then start hosting its own applications, and squeeze his company out.Does Oracle have cloud today? It says it does. But cloud means more than just running your software in a virtual environment. It means commodity hardware, a shared development approach and a clean sheet of paper, with immense savings going to the customer. It is anathema to how Oracle does business. Knowing this, Benioff is now trying to get on the cloud train. As Business Insider notes, Salesforce now hiring experts on an open source (non-Oracle) database technology called PostgreSQL. It's pushing a cloud application platform called Heroku, bought for $212 million in 2010, which can run on top of Amazon's EC2 cloud, as Wired notes. Oracle's success is based on its database as surely as Microsoft's (MSFT) is based on Windows (or Salesforce's on its Customer Relationship Management or CRM application, hence its ticker symbol). But the economics of all these companies are being overwhelmed by the push toward real clouds, an open source platform built on commodity hardware that can scale infinitely. The essence of cloud is that you can cooperate, even with direct competitors, on common problems, and that you're not dependent on any one vendor -- that you can switch.
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