For biz microblogs, hosted services or installed software?

Yammer's hosted model is built for the future, but Presently's software can be downloaded today.

I recently talked to execs from two companies that do exactly the same thing but in completely different ways. In one corner, Yammer, the 2008 TechCrunch50 darling. It's a Twitter-for-the-enterprise service that's hosted by Yammer. Any company can get its employees on to the service, but all the data is run through, and hosted by, Yammer itself.

In the other corner, Presently (found at Present.ly), another Twitter-for-the-enterprise product. Customers can use Presently in the cloud, just like Yammer, but the company makes its money from, and has most of its users on, its software that customers can install on their own networks, "inside the firewall," as they say.

Which is better? Dave Naffis, co-founder of Presently maker Intridea, told me that most of his customers are on the self-hosted version. "They try the SaaS (software as a service) version briefly then install the on-premises version. Over 70 percent of our customers are hosting internally," he says. Presently is installed at more than 50 companies, he claims.

Given what Naffis' customers are saying and paying for, it's understandable that he's going in the software direction. Just announced is a new self-install kit: Companies can sign up for free online and get a 30-day free trial license for the Linux version of the software (for Red Hat Enterprise Linux 5 or CentOS 5). There's a predictable, one-time license fee of $2,000 (for up to 1,000 users) with maintenance fees running 5 percent to 20 percent a year on top of that, depending on services needed.

Naffis does believe that, "Over time, customers will get more comfortable with data in the cloud." But, he says, "a lot of these large companies are not there yet. Maybe in three to five years."

So the Presently strategy is to sell companies an architecture they can get behind today and will presumably be there for them when they drop their objections to running a corporate communications system through a hosting service. But the company will have to wean its customers off the installed software and back to the hosted service, and there's no way that will be easy.

Yammer keeps getting better, but its critical advantage is its architectural philosophy. Screenshot by Rafe Needleman/CNET

Meanwhile, Yammer, which has more funding, has dropped its downloadable software strategy entirely. CEO David Sacks did tell me that early in the young company's life he heard the reservations of corporate IT guys about running a service like this off-site. His company announced that it would create a downloadable version of Yammer.

But over time, Sacks says, he came to believe that all his clients were all going to get with the program on cloud-based computing eventually. And, he says, Yammer-as-a-service started selling. The service costs $3 to $5 per user per month, depending on features needed.

Yammer has stopped work on the hosted version of the product and is now aligned completely around the SaaS service. Sacks cites a few Fortune 1000 customers using the product, like AMD. The market for his type of communications service is not as big as he wants it to be yet, but, he says, "It's big enough to support us today."

And, of course, Sacks is happy to rattle off the advantages of focusing on the service-based product model: No tedious and expensive upgrade distributions; no need to support legacy users who don't upgrade; the freedom to spend 100 percent of product development on one version of the product (and features for it); and the speed with which updates can be rolled out to customers.

Yammer has the strategic advantage in the hosted-vs-software model due to its deeper pockets (it raised $5 million in venture funds), which allows it to bet on the future instead of selling products based on today's architecture.

I didn't really like Yammer when it launched a year ago. In fact, I liked Presently a lot more and awarded it a special Webware 100 award in 2009. I felt Yammer was too spare. Since then, Yammer has added features (such as integration with Twitter), and rolled out more client apps, including one that embeds Yammer into enterprise e-mail client Outlook. It's a much better service now than it was when it launched.

I don't have enough information to judge the products on purely technical merits. Corporate customers will want to talk to Yammer and Presently reps themselves to see which service they're more comfortable with when it comes to scalability, reliability, and security.

Regardless of the feature comparisons, and even regardless of numbers of current customers, I give the strategic nod to Yammer, because it's not building for today's market, but tomorrow's, and it has the resources to wait it out. The whole enterprise Twitter space may collapse (if, for example, Twitter releases a strong business-focused service on its own), but if it does survive, over the long term, it looks like Yammer is better positioned to slide into the market that will be.

 

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