A Cretaceous Checkpoint

In our last installment of doing tomorrow’s technological paleontology today, I laid out my case for why IBM’s future looks different than the last decade because financial engineering isn’t the kind of engineering necessary to make the transition to the cloud. For my efforts, I got a lot of financially-oriented pushback that basically amounted to “past performance is in fact an indicator of future performance” and pointers to predictions from all-knowing Wall Street analysts who think IBM stock is going ever higher. I don’t pretend to know where the stock market is going in the short term, but I do believe IBM faces massive headwinds in the midst of a generational shift in technology. Interestingly, people associated with IBM were unanimous in their agreement with my thesis, both publicly and privately.

Since then (March 30), we’ve seen:

  • IBM miss big for Q1 – they missed on both revenue and profit and both declined in absolute terms. The revenue miss was over a billion dollars so in all likelihood they have pushed considerable revenue into Q2. They reiterated their full year guidance so Q1 is evidently just a blip in their mind. CEO Rometty berated the sales force, saying “Despite a solid start and good client demand we did not close a number of software and mainframe transactions that have moved into the second quarter” and sent a video message to employees telling them to work harder and to actually call back customers. Executives were reassigned. Upwards of 8,000 employees are getting laid off. Obviously, there are no issues with the product portfolio or strategy,
  • IBM try unsuccessfully to sell its x86 server business to Lenovo – they couldn’t call out a business they want to sell as underperforming, so the venerable mainframe took the blame this quarter, but its server business overall is seeing double digit revenue declines and IBM’s x86 business is a big part of the problem. Lenovo thought the price was too high so it doesn’t look like IBM’s PC divestiture will be repeated on IBM’s terms. IBM seems to be saying they want to keep milking their big iron installed base but don’t think they can compete in the mainline server hardware business going forward (and make no mistake, cloud is consuming a ton of servers).
  • IBM buy SoftLayer for $2 billion – so maybe SmartCloud wasn’t the be-all and end-all of clouds it had been touted as and perhaps no one at IBM could figure out what “autonomic” meant either. This is a big acquisition and very different than the legacy software rollups IBM has been doing of late. They paid a pretty good premium, there is integration risk and this is real money that is no longer available for financial engineering. Everyone has looked at SoftLayer (including a few of my former employers) and this pencils out primarily a people acquisition. We’ll see if IBM can retain hosting talent, especially when it sounds like full-on integration is in the cards. As Barb Darrow reported:

    Dennis Quan, IBM’s vice president of SmartCloud, told me the plan is to build a “compelling IaaS layer that leverages IBM strengths in open standard-based private cloud, enterprise workloads and use of Openstack married with the speed and scale of what SoftLayer has today.”

    To non-IBMers, this sounds like a matter of glomming together at least two disparate sets of technology. A Frankencloud of sorts.

  • IBM complain that Amazon beat them for the CIA cloud deal – IBM cried foul after AWS won a $600 million deal to build a private cloud for the CIA. Evidently IBM was so upset about losing they filed a formal protest. It looks like IBM tried to buy the business with a lower bid so they could tell customers they run the CIA’s cloud but their complaint ended up highlighting the inadequacy of their cloud offerings. The GAO concluded Amazon offered a “superior technical solution”, Amazon’s proposal was “low” risk while IBM’s was “high” risk and that the CIA “reasonably determined that IBM failed to clearly establish the capability of its existing public cloud to auto-scale all applications”.  Tip to IBM: if it requires a busload of consultants, it isn’t auto-scaling. It is a bad sign when IBM can’t even win government contracts, although one could argue that the best way to impede the ever increasing scope of the all-seeing eye of our government would be to outsource the surveillance state to IBM.


Yup, all is going swimmingly in Armonk. I maintain my view that mean reversion is happening, the rainy day fund has been depleted, IBM can’t innovate on technology at a time they must, they’re still way behind on cloud, the big industry trends are against them and their traditional customers are not going to save them time because they have their own set of problems.

I originally thought because of the size of the Q1 miss, IBM would have no problem with Q2 but now I think there is a decent probability they will miss again (currency effects are likely to play a role). At some point, people will start to realize the problem is not a sales force slacking off, but more fundamental.

In our next visit to the late Cretaceous period, we’ll look at Oracle, a company besotted with recreating the business model from IBM’s glory days and who also claim to be afflicted with the lazy sales force disease.

Disclosure: I sold my tiny number of IBM shares that I acquired through no fault of my own at $208.


I have a theory that companies peak soon after they make big, bold, public and very round revenue forecasts of fifty billion or more.  Basically, they’re so busy trying to grow to the sky they miss important changes in the market and/or hubris gets the better of them.  In some cases, the wheels come off the bus in spectacular fashion (see IBM, Compaq, Dell to a lesser extent) shortly after the big revenue goal gets hoisted (revenue goals being the BHAG substitute for the strategically bankrupt).

It is time to add Google to the official Platformonomics Hubris Watch (PHuW!™) based on a reported passage in the new Ken Auletta book about the company.  It is qualified slightly (“could”) and not a direct quote, but the official ruling is it is sufficient to get Google on the leaderboard:

In 2007, Eric Schmidt told me that one day Google could become a hundred-billion-dollar media company—more than twice the size of Time Warner, the Walt Disney Company, or News Corporation.

Here is the Official PHuW!™ Leaderboard:



Target Date

Date Added

When Added

Current Revenue

Oracle $50 billion 5 years 6/2007 ~$18 billion ~$23 billion
Google $100 billion None 10/2009 ~$25 billion ~$25 billion


  • Google gets credit for having the biggest delta between current revenue and the aspiration.  They were smart enough not to put a date on it.  Or maybe they’re betting on hyperinflation.
  • Arguably, this should be backdated to 2007 to the time of Schmidt’s comment (but we wouldn’t want to get into trouble for backdating…).  It is interesting that a lot of Google’s big dreams have come back to earth since Schmidt made the comment.  Google is still zero for all the megalomaniacal initiatives they have thrown at the wall (radio, TV, enterprise, alternative energy, personal DNA sequencing, Second Life clones, etc.).
  • My general view remains that Google is going through the same arc that Microsoft went through except on a much more compressed timeframe.  They have less time to build additional businesses and competitors including sovereign nations have rallied to keep them from expanding their footprint as a prelude to going after their core franchise.  One of Microsoft’s big challenges was to pose a modest threat to the media, who buy ink by the barrel.  Google has this issue in spades as they pose an existential threat, and it is already coloring perceptions of the company.
  • Oracle update: they have vacuumed up pretty much everything not nailed down in enterprise software, but they’re still not even halfway to the goal.  Jacking maintenance fees will only take you so far (the customer backlash is finally building) and the Sun acquisition buys them less revenue with every passing day.  The Sun bid sure looks like the acquisition strategy in pursuit of the big number has taken on a life of its own.  There is an argument they’re getting a great price, and I still think they’ll flip the hardware business as soon as they can.  But there is still a lot that can go wrong and the deal doesn’t fit the acquisition template they have been using (it is hard to jack maintenance fees for Sun’s give-it-away-for-free-and-make-it-up-on-volume software “business”).

Have I missed anyone else who should be on the leaderboard?


image Proposed stock symbol: SORE

Customer line: “I’m a SORE customer…”

Rejected names: Sunacle?  Too close to Unocal.  Orasun?  Sounds like a cloying dental product.  Orsun?  You could easily swap Ellison for Hearst in the remake of Citizen Kane…

Ok, so this isn’t a merger of equals.  It is the end of Sun.  Only Oracle survives.  But this deal surprised me.  I figured if Oracle wanted Sun, their well-oiled M&A machine would have swooped in a while ago rather than waiting for IBM to set things in motion, though there are rumors that Oracle made a joint bid with HP last year.  They certainly could have gotten a better price.  Did IBM get pulled in to play the second bidder?  The extra dime Oracle is sharing is not exactly the sign of a bidding war.

Quick thoughts:

  • MySQL – you’d never know Sun owned it from the Oracle press release.  Interesting market definition problem for the antitrust authorities evaluating this transaction.  With MySQL’s European heritage, maybe we’ll get some more novel legal theory from the EU.
  • Solaris – Oracle has been treating it as a legacy platform in recent years and it is hard to see Oracle being any more successful with Solaris vis-a-vis Linux than Sun. After all, Oracle’s Linux relationship is unbreakable…  But the acquisition means Solaris can reestablish itself as Oracle’s choice for high-end deployments.  Not clear whether Solaris remains a go-to platform beyond the database.
  • Sun’s Hardware Business – this definitely gets flipped to HP, Fujitsu, an Asian up-and-comer or someone else.  Sun doesn’t have the share and Oracle has too much invested with partners to go to the vertically integrated model (not even IBM can sustain the vertically integrated model and they invented it).  Oracle must already have a plan here (is there another shoe to drop with HP in the next few days?).  The hard part is how to minimize the atrophy during the long road to closing the deal.
  • SPARC – Oracle wants nothing to do with this.  Maybe Fujitsu will take it.
  • StorageTek – hope someone does the math on how much value got destroyed with this acquisition.  Sun bought this company just as disk became cheaper than tape.
  • OpenOffice – this deal could be a big boost for OpenOffice, as Oracle can’t resist an opportunity to tilt at Microsoft, especially with Microsoft driving more and more integration between the Office suite and the back-end applications that are Oracle’s bread and butter.  Oracle can provide OpenOffice a value proposition beyond price.
  • IBM – they got a good look at Sun, but in the end I suspect they’re going to regret not doing this deal.  They regretted giving Microsoft control of the software crown jewels for the PC; they may face similar situation now on the server.  Oracle can have a lot of fun making IBM choose between  open systems sanctimony and controlling their own destiny.  That of course assumes there is more relevant innovation to be had around Java.  IBM should have figured out how to get through regulatory approvals or how to cut the company up into piece parts to get what they wanted.
  • Integration Risk – this is a very different deal than the other big acquisitions Oracle has done. Sun customers are skittish as is and there is minimal maintenance gravy train here.  Whereas Sun offered IBM access to a bunch of net-new customers, I suspect Oracle is already in all of Sun’s accounts.  Serious layoffs ahead at Sun regardless of how it plays out for Oracle.
  • Consumer/Embedded Java – not exactly high on Oracle’s priority list.  Maybe it finally gets liberated in gesture of openness/misdirection by Oracle.  Maybe they can sell it to Google.  It fits nicely with the Android (lack of) business model.
  • Open Source – will be interesting to see if any of the projects Sun open-sourced get fork and/or critical mass.  Some argue Sun has already lost control of MySQL.
  • Timing – I need to go back and look at the sequence, but Oracle has been pretty good since their acquisition parade began at timing deals in such a way that they help their year-on-year comparisons.  Never forget Oracle is managed financially these days.  This might explain why they didn’t pull the trigger on Sun earlier.

What did I miss?

MySQL or My Bad?

I was wondering a few months ago how Sun’s MySQL acquisition would impact their relationship with Oracle:

How has the MySQL acquisition by Sun impacted the relationship with Sun’s biggest historical partner, Oracle?  I may be misjudging Oracle’s leadership, history and culture, but my guess is they view databases as their birthright and treat any real or proposed encroachment, even from a company with as poor an acquisitions record as Sun, as a serious matter.

The answer is becoming clearer:

  • Oracle has entered the hardware appliance business, partnering with HP
  • Sun’s stock is trading near a 13-year low
  • Sun’s CEO got a 44% pay raise

(Ok, the last one isn’t so clear).

The next question is what is the end game for Sun?  Do they circle the drain like Silicon Graphics (yes, they are still in business) or do they get consumed by the likes of Fujitsu or perhaps a rising dynamo from the developing world?  Leave your predictions as comments and maybe we’ll start a pool.

Oracle BEArs Down

With a $6.66 billion (numerologists take note) unsolicited, all-cash bid for BEA Systems, Oracle further cements their role as the new Computer Associates, i.e. the ecosystem scavenger.  BEA seems to have accepted they’re in the endgame, quibbling only about valuation and not their independence.  Quick thoughts:

  1. The acquisition suggests Oracle’s Fusion middleware may not be quite the juggernaut the company has claimed it to be.  Oracle seems to have dropped any pretense of rationalizing their acquisitions, and are content to milk the maintenance revenue, cross-sell whatever they can and make parallel albeit shallow R&D investments in each codebase.  But the side effect of maintaining all those silos is they are making the integration mess even worse.  Now that is a business opportunity for Oracle middleware, but customers are not going to appreciate the Oracle cross-sell requiring higher cost and integration complexity.
  2. Another big acquisition means more churn for Oracle’s financials, further postponing judgment day on the financial outcome of their acquisition binge.  No doubt this transaction will be timed like other deals to start adding to Oracle’s year-to-year comparisons just as other deals have contributed a full four quarters of apparent growth.  The question is about their organic growth.
  3. I doubt any other bidders emerge.  Speculation has centered on HP and SAP.  HP is plausibly interested but I don’t see them getting into a bidding war for the likes of BEA.  SAP still believes in architectural coherence so hard to see them getting into the fray.  Maybe there is another bidder with a similar financially-driven roll-up strategy to Oracle (e.g. Infor) or a private equity company trying to find something to do with all their cash.
  4. There are a couple key things to understand about BEA.  It derives most of its revenue from a very small number of customers (around 100) so they don’t provide any scale in terms of customers or technology.  The majority of their revenue is from consulting services, not software (shades of IBM’s acquisition strategy).  And the legacy Tuxedo business is stronger of late than the newer WebLogic and AquaLogic products.
  5. Given BEA hasn’t actually filed financials with the SEC for multiple quarters (due to stock option backdating), I am sure Oracle will insist upon some serious due diligence.

The Much Misunderstood Larry Ellison

samurai1 It is not often I rally to Larry Ellison’s defense.  In fact, it has never happened, unless you count that incident involving two underage interns, the failed MiG fighter acquisition and ten thousand cubic yards of Jello, but the legal settlement thereof bars further elaboration.

Larry recently made a statement which people are assuming is just a typical, cynical, self-serving, Machiavellian exercise in spin and depositioning as befits a disciple of Sun Tzu and Miyamoto Musashi (bonus points for the commenter who can connect the advice of either of those strategic gurus with dumpster diving).

But what if he actually spoke the truth?  Past performance admittedly might lead you to overlook such a possibility, but Larry’s comment came during Oracle’s quarterly earnings call with financial analysts last month.  It slipped out in the midst of the ritual competitive bashing, in this case of SAP’s new midmarket offering, that Oracle uses to distinguish its conference calls from those of other publicly traded companies:

“So while we think it’s an interesting market — the small market — because it’s large, we just haven’t figured out a way to make a substantial profit in that market. We think it’s hard to make money. Our strategy: add more value, go upstream, sell industry-specific software to our existing customers, and we’ll watch and see how SAP does going after small companies. Especially with in Software as a Service which we think is very interesting, but so far no one has figured out how to make any money at it.

Focus on the last line about the bottom line where Larry questions whether people can make money off of SaaS in the SMB market.  The SaaS euphoria has been driven largely as a technical imperative by enthusiastic new market entrants.  The SMB market has been held up as a green field that lets providers sidestep the myriad complexities of the enterprise.  And there is no doubt this is a vast and underserved market that would love to eliminate the hassles of deployment and operations.

But what about the profit opportunity?  Now Oracle is a company run by investment bankers these days, but it is a company that banks serious profits – over $4 billion last year with net margins approaching 25%.  When they look at business opportunities, they are looking for big profit pools.

Larry Dignan at ZDNet jumped in and channeled his namesake:

What Ellison could have said [is that] no one has found a way to make gobs of money in SaaS. Salesforce.com is profitable but you could find the $481,000 the company made in its latest fiscal year in Ellison’s couch. Indeed, without maintenance fees SaaS may be less profitable in the long run.

However, Ellison can make these comments precisely because Oracle has its SaaS plan ready–it’s called NetSuite.

I think he was a lot closer with the first paragraph than the speculation in the second paragraph.  Larry does have a personal investment in NetSuite that is raising interesting questions as NetSuite tries to go public, but I believe that is irrelevant.  No matter how you look at it, a subscription-based SMB-focused SaaS model at scale looks like a tough business model.  NetSuite certainly has no solution to the financial challenges as we’ll see below.

Nick Carr also noticed Larry’s comment in a good piece on the shifting sands of enterprise software although he displays less than his usual level of certainty:

How will the competition play out? I wish I knew. There are at least two unknown variables: the speed with which the SaaS model penetrates larger companies, and the ultimate profitability of the SaaS model. There are some indications that the adoption of SaaS is advancing more quickly than expected, but there are also indications that the hype may at the moment be getting out ahead of the technology. As for profitability, about all we can say is that Ellison is probably right: SaaS is unlikely to be as lucrative as the old licensing model that it’s replacing – which happens to be very good news for customers.

Profitless prosperity may be great for customers, but at some point companies and their investors will have to find some profits or the activity will come to an end (unless you’re in the airline business).


That was a really verbose motivation to take a look at Salesforce.com’s financials and make a prediction about their stock price direction.  As the SaaS poster child, they offer some interesting lessons in the search for potential profits from SMB SaaS.  My conclusion is that the poster child’s economics are not only not the shining beacon for the industry you’d expect but actually a disappointment.  Lets go to the numbers:

  • Revenue: $613 million over the last four quarters.  Up from $497 million for the last full fiscal year (we’re half way through the latest fiscal year), which in turn was up 60% on the prior year.  No doubt Salesforce has been a great revenue growth story.
  • Earnings: $8.17 million over the last four quarters, up from Dignan’s $481,000 in couch money for the last full fiscal year (but below 2006’s $28 million).  They’re not doing a great job turning that revenue growth into profits, and this is a company that has been around since 1999.
  • Interest income: $22.43 million in the last four quarters, which is nearly three times the company’s overall net profit in the same period.  Hmm…
  • Valuation: Salesforce has a market capitalization of over $6 billion as I write this and trades at a forward P/E of over 500.  That valuation is supported by less than a million dollars per month of profit and no profit if you take out interest income.  Wall Street has some mighty big expectations for future profits.

So where will those profits come from?  The problem is there is a giant sucking sound on the income statement that exerts massive drag on profits: sales and marketing which is a proxy for what it costs to acquire customers.  Bruce Richardson at AMR computed the numbers:

Over the last six quarters, salesforce.com has spent between 49.7% and 51.1% of revenue on sales and marketing.

NetSuite is no better  and could be worse, again from Bruce Richardson:

As NetSuite’s Zach Nelson pointed out in The Wall Street Journal (September 19, 2007), even with free trials, it tak
es two months and three to five product demonstrations to close a sale. He was quoted as saying, “It isn’t easy to figure out how to acquire customers and keep them happy at a low enough cost that you still earn healthy margins.”

A cursory review of NetSuite’s financials in their recent S-1 filing to go public shows they lost $23 million on $67 million in calendar 2006 and while they have a nice revenue hockey stick over the last three years, the profit line is borderline horizontal and well below the x-axis (i.e. in the red).  They also call out explicitly the challenges of SMB customer acquisition:

Our customers are small and medium-sized businesses, which can be challenging to cost-effectively reach, acquire and retain.
We market and sell our application suite to SMBs. To grow our revenue quickly, we must add new customers, sell additional services to existing customers and encourage existing customers to renew their subscriptions. However, selling to and retaining SMBs can be more difficult than selling to and retaining large enterprises because SMB customers:

• are more price sensitive;

• are more difficult to reach with broad marketing campaigns;

• have high churn rates in part because of the nature of their businesses;

• often lack the staffing to benefit fully from our application suite’s rich feature set; and

• often require higher sales, marketing and support expenditures by vendors that sell to them per revenue dollar generated for those vendors.

If we are unable to cost-effectively market and sell our service to our target customers, our ability to grow our revenue quickly and become profitable will be harmed.

The subscription model Salesforce, NetSuite and many other SaaS vendors use is extremely sensitive to the interplay between the cost to acquire a customer (which is an up front cost before you see any revenue), the average revenue per user (which dictates how long it takes to pay back the up front cost, never mind COGS and overhead) and the rate of churn (which tells you how many customers will stick around long enough to pay back the up front cost).  Small deltas in these numbers can make a big, big difference in terms of profitability.  Vonage is a great example of what happens when those numbers don’t add up harmoniously.  And these parameters are interdependent.  Raising prices likely increases churn, for example.

One argument to support Salesforce’s valuation is they are a young company that is investing for growth and just need to get to scale for their business model.  The difference however is they are not like the traditional software company trying to grow into a relatively high, relatively fixed R&D budget where above some threshold additional revenue falls largely to the bottom line.  Salesforce spends relatively little on R&D and their capex on infrastructure is surprisingly low.  The issue is their sales and marketing cost which seems to scale with revenue.

Looking at Salesforce’s future, they face a couple challenges.  Revenue growth will continue to slow.  It has been slowing for five years.  It is always harder to sustain your percentage growth on a bigger base.  And with minimal profit growth, revenue growth seems to be the proxy for the sky-high multiple, and assumes a big profit payoff is coming some time in the future.

They also will face intensifying competition.  Microsoft will soon offer a hosted version of Dynamics CRM, which has only been available as an on-premise offering to date.  The product offers native Office and Outlook integration, deep customization  and broad partner support.  SAP and Oracle are also peripherally in this market, although both have pricing above Salesforce and haven’t really been serious to date about the SMB CRM market.  There also are other startup competitors like NetSuite.  Competition can impact the key variables in a couple ways, all negatively:

  • Acquisition cost – it is likely to cost more, not less for Salesforce to win a customer in the face of more competition.  Today Salesforce spends over $700 to acquire a new user.  Competitors like a Microsoft or an Oracle may have a structural advantage in terms of acquisition costs because they are global players with an instantly recognizable brand who can spread their sales and marketing investments across both on-premise and SaaS deployment options for their software.
  • Average Revenue Per User – competition also tends to reduce prices.  Microsoft’s pricing of $39-59/user/month for the SaaS version out of the gate will undercut Salesforce’s approximately $71/month in average revenue per user. 
  • Churn – when customers have more choices, they’re more likely to go somewhere else.  Today Salesforce needs about ten months to pay off the initial acquisition cost of a subscriber.  When you add in COGS, R&D and corporate overhead, it is more like 18 months.  And unilateral competitive spite gestures on par with cutting off the nose to spite the face probably don’t help on the churn front either (see The Fat Guy‘s blog).

Small perturbations in these parameters can have a huge impact on the attractiveness of the model, and it is easy to see downward pressure on all of them.  It is hard to see how Salesforce can reduce their marketing spend as competition heats up unless they want to stop growing.  So what happens?

  • Salesforce will continue to pursue more “enterprise” customers and try to move up market.  Their average seat size per deal has almost doubled in the last five years and a very small number of customers (<100) may account for upwards of 40% of their seats.  The enterprise may prove a more cost effective marketing environment, but it also brings with it many more requirements and competition (in their favor, one of those competitors is Siebel, now owned by Oracle, who have the least satisfied customers I have ever seen).
  • Salesforce will continue to push their platform strategy.  It is a nice story, but it hasn’t contributed any discernable network effects to date that reduce acquisition costs.  But they seem to be doubling down that it might, suggesting a lack of other promising strategies.
  • You will see serious multiple compression for Salesforce (meaning their stock price goes down).  Baring some kind of miraculous breakthrough in terms of a more efficient marketing model for the SMB market, slowing revenue growth without any concurrent growth in profits is going to squeeze the stock.  Going from an insane forward P/E of 500 to an almost-as-insane 250 means the stock halves.  But the reality is when the sentiment flips, the compression is likely to be more extreme.  I think the stock hits the wall in the next 9 months (and the company likely will continue to see good revenue growth in that time).  The frenzy of insider selling suggest this possibility may not lost on management.
  • Salesforce will try to sell out and the challenge for Marc Benioff is the timing.  They simply can’t get to the scale needed to be a viable, standalone, long-term company on their current path with their current scope.  Most of the buyers probably understand that even with sustained revenue growth, in the absence of commensurate profits emerging, the company will likely get cheaper over time.  So who might be a buyer?  Some say Google but Salesforce’s inefficient, unautomated mark
    eting model is anathema to Google’s economic model.  My best guess, to bring this now way-too-long post for the three readers still with us full circle, is none other than Larry Ellison, who was perhaps being both truthful and crafty in his comments far above.  He once said of the old Computer Associates: “every ecosystem needs a scavenger”.  That idea evidently grew on him and he’s made it the strategy at Oracle, spending tens of billions to roll up business applications companies, where they can jack up and harvest maintenance revenues from relatively price-inelastic customers and cross-sell across the installed base.  It is a strategy fundamentally based on leveraging their sales and marketing model.  Buying Salesforce would give Oracle a more powerful CRM franchise than the legacy lineup they have today.  It would give them a stronger SaaS offering in addition to their on-premise offerings, although they would not have the advantages of a single code base for both deployment models unless they packaged up Salesforce to license to others to run.  They could continue to push Salesforce up into the enterprise market or use their existing marketing machine to at least sell into the mid-market.  And if the platform play starts to kick in, Salesforce does run on the Oracle database (unlike, ironically, some of Oracle’s other SaaS offerings…).  Obviously Benioff goes way back with Ellison, who had an early investment in Salesforce.  If Tom Siebel can be welcomed back to the Oracle mothership, so too can Marc Benioff.  Just a matter of the right price.

Disclaimer: I am not a financial analyst, don’t play one on TV but do think the above prediction is far more probable than some of the things that have surprised the best and brightest of the financial analysts of late.  I have no positions in CRM or ORCL.

(Image copyright The Cartoon Network)