Benioff takes stock of software shifts

The CEO weighs in on cloud computing, an uneasy economy, and why Microsoft is still a dinosaur.

For years, Marc Benioff appeared in public wearing an "End of Software" button on his lapel--just to rankle Bill Gates, Larry Ellison, or any other software mugwump making a killing on selling packaged applications.

Nowadays, the peripatetic entrepreneur might just as well swap the old buttons out with a replacement bearing a new slogan: "Told you so."

His company,, which posted record fourth-quarter revenue, raised its outlook for its next fiscal year to between $1.03 billion and $1.035 billion. The company, which has become closely identified with the move toward software as a service, has registered 85 percent annualized sales growth over the last five years.

But now has company. Among other new rivals, the company will butt heads increasingly with Microsoft, which has committed itself to offering more software services via the Internet.

CNET caught up with Benioff to talk about the future of software services as well as his plans to re-create as more of a computing platform.

Q: In 2005 you said that Microsoft was a dinosaur facing the obsolescence of a technology and a business model. Fast-forward to 2008 and Microsoft just had a big event in Las Vegas, where Chief Software Architect Ray Ozzie got up onstage and articulated a vision that had a lot of similarities to what you're talking about vis a vis platform as a service, such as its SQL Server data services. So, has your opinion changed?
Benioff: No. If we had waited for Microsoft to create any of those, nothing would be created yet. Look at the whole software service phenomenon. Where are they?

I think Microsoft is still a dinosaur.

But what I'm asking today is whether you have changed your opinion. Do you think that Microsoft is still a dinosaur?
Benioff: I think Microsoft is still a dinosaur. More than ever, it tries to hold onto its monopolistic position around technology that they hold, whether it's SQL Server, whether it's NT, whether it's Windows, whether it's Office--these are their cash cows they don't want slaughtered.

But are those cash cows monopolies?
Benioff: Well, I think one was ruled a monopoly.

Right, but we're talking about SQL Server. We're talking about their software-as-a-service strategy, and so on. Can we consider those monopolistic?
Benioff: Well, not in the same way, of course. But the point is that they're trying to hold onto their past more than trying to create their future. This has been the great failing of Microsoft over the last 10 years. I haven't seen the level of innovation from them that we see from other vendors.

As the concept of the platform as a service becomes more of a reality over the next decade, do you think that Microsoft has an opportunity to be one of the big platforms?
Benioff: The evidence is that history, more or less, will repeat itself because there is no acknowledgement to some of the core tenants of this new paradigm. I think only in the cases where they will be dragged, kicking and screaming, and I think the best example probably is Gmail.

Google is doing really well with Gmail. I think that's why now you will see Microsoft have to respond with a multi-tenant e-mail solution. They have Hotmail, but not Hotmail for business per se. They're definitely going to have to do that.

With Ozzie taking over as chief software architect, Microsoft is talking more about how to take the plunge in software services. So where do you see the chief obstacle preventing them from turning this into a success? They've got all the developers in the world.
Benioff: I am not the CEO of Microsoft so I don't really know. You'd have to ask them why they haven't delivered on the vision. We're not unique in saying that it's the end of software. That's our phrase, but Microsoft has not delivered on the promise. They haven't used their power to innovate in the way that others have.

Do you say the same thing about SAP and Oracle as well?
Benioff: When I left Oracle nine years ago, Oracle's revenue was $10 billion a year. Today it's $20 billion a year. Where Oracle has innovated is in the business model. You've seen substantial growth and a substantial return to Oracle shareholders through that change. With SAP, you really have not seen innovation in the last 10 years. If you think about what is the one thing that SAP has ever innovated, what have they created that's unique to the industry or value-added technology? I have a hard time thinking about what SAP is going to be known for at the end of the day.

The application service provider model was popular in the '90s but got hurt when capital dried up and the economy went south. Do you see parallels with what's going on nowadays?
Benioff: I think it was because of the code. They were trying to repurpose other people's code and they were just trying to move your data center into their data center, but it was still the same old code.

These days, people go home and they're having a really great experience on the Internet. They're already using Web 2.0, with all these great applications and they're blogging and collaborating with their friends. But then they get to work and they don't have that same quality of application.

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