As reported last week by CNET News.com, the partnership formed by the two companies will provide small businesses with the hardware, computer support and software for Web-based operations. Salesforce.com offers services that allow salespeople to track leads and account information online.
Although the small-business market is growing steadily, computer systems makers have yet to make inroads in the sector, according to some analysts. Companies such as Microsoft and IBM subsidiary Lotus have attempted to woo small-business owners, while IBM rivals including Dell Computer, Hewlett-Packard, Compaq Computer and Gateway have recently established programs that offer discounted hardware and other services.
International Data Corp. analyst Ray Boggs said that although more than 85 percent of the 7.5 million small businesses in the United States have PCs, many haven't found an economically feasible way to get their businesses online.
"We're at a very early stage from the standpoint of using the Internet as a way of getting services" to automate business processes, Boggs said.
Through its WebConnections service, IBM plans to offer subscriptions to various Web-based application services, such as Salesforce.com. WebConnections, which was unveiled last September, provides hardware, software, tech support and Web-hosting services for small businesses. The services are priced from $99 per month.
The IBM-Salesforce.com partnership involves joint marketing and promotion of both companies' services. The companies plan to launch a joint Web site, IBM.Saleforce.com, the companies said.
"The step of getting on the Internet or in e-business is a daunting task for small businesses," said Michael Braun, general manager for IBM's global small-business unit. "We build a network for them. Now that they are on the Net, they can begin to use other applications over the Net...The game plan is to bring them (applications) they most need over their network."
For Salesforce.com, founded in March and led by ex-Oracle executive Marc Benioff, the deal marks its first major distribution agreement.
"It's terrific to be wrapped up in that Big Blue blanket," said IDC's Boggs. "This gives them the ability to reach customers that they weren't able to reach."
Vern Keenan, an analyst who heads San Francisco-based Keenan Vision, said that having IBM's weight behind its service validates Salesforce.com's position in the market for customer relationship management (CRM) software. CRM, which has been widely perceived as the next big software, automates a company's sales, marketing and customer support needs.
"It's their largest distribution deal to date and an important market validation for them, especially against (Siebel Systems spinoff) Sales.com," Keenan said.
The company is one of several online applications firms that have recently popped up to serve small businesses. Similar firms include NetLedger, another Ellison-backed start-up; Trustedanswer.com; and Sales.com.
Through the end of July, new customers who sign up for both services will receive five free users of Salesforce.com for one year as well as WebConnections free for six months with a minimum of a one-year contract, both companies said.
Halsey Minor, chairman of CNET Networks, which publishes News.com, is an investor in Salesforce.com.