UPDATED 16:35 EDT / AUGUST 05 2010

Microsoft-Salesforce Deal is Just Lip Service

Microsoft and Salesforce may have made public amends over their epic patent battles, but that doesn’t mean the war is over. Microsoft is still seeking out ways to push cloud services to clients, while Salesforce’s stance against the software giant has taken a retaliatory course. So is their out-of-court agreement a sign of a peaceful future, or bloody battlegrounds for those that come to rise in the aftermath?

Most likely, it’s the latter. Microsoft’s looking to the cloud for a revamped business model, while Salesforce has been using the cloud to pull itself into global recognition. As large contenders have deep-pocketed resources backing them, it’s the smller players that end up effected the most. This type of shake-up isn’t entirely uncommon for industries seeking to replace old systems–we saw similar patent wars with VoIP and other technology firms in the past few years.

So while the fierce back-and-forth between Microsoft and Salesforce has resulted in the two companies giving each other respective patent coverage, we’re sure to see this same fight play out with other cloud vendors. John Furrier comments,

“Microsoft and Salesforce hate each other. Salesforce has innovated the SaaS model before anyone and they were [in the] cloud before there was [a] cloud. Microsoft is the big whale who is now running scared of Salesforce and trying to catchup with moving their legacy technology and platforms to the cloud. This poses a few challenges in that Microsoft has big money from their legacy and their technology needs to be modernized. This will take time, but Microsoft is moving toward cloud in a big way. The question is can they be nimble enough to create value in a cloud architecture.

Conversely, Salesforce is small compared on a revenue basis. There is no way these two companies will partner. If they do partner it’s all “lip service” to the market. Microsoft and Salesforce are battling it out in the cloud.”

Looking forward, SMBs will have a widened array of cloud computing services to consider, for security, advertising, client-facing applications and internal communication systems, to name just a few examples. Concerns over patent-holding could effectively make a smaller player irrelevant all together, or simply create tension amongst influencers in the cloud computing industry. Competition is good, but not when it means a vendor could end up immobilized in the end.


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