Marc Benioff says Salesforce.com is on target to hit $1 billion in revenues next year, but I don't think it'll happen. I predict that before Salesforce.com hits that run rate as an independent, publicly traded company, Oracle will buy it.

This is nothing more than an educated hunch, but a strong enough one that I'm willing to put my name on it. Here's why I think it'll happen.

1) The troika of Larry Ellison, Charles Phillips, and Safra Katz has indicated it's going to keep on acquiring, and some of those acquisitions will be big companies. I think Marc plans to eventually sell Salesforce.com, and I think Oracle is one of few companies that could afford it. There's Microsoft and IBM, but....

2) Oracle "gets" Salesforce.com, and Salesforce.com "gets" Oracle. I lived many years in Silicon Valley and San Francisco, and I've talked to many folks at IBM and Microsoft over the years. Salesforce.com's culture wouldn't fit well with either. Marc, who came out of Oracle, is outspoken, flamboyant, yet casual, while also unnervingly quick and cutthroat. Kind of like Larry. That's the Silicon Valley executive personality, and I don't see it meshing with the folks at IBM and Microsoft.

3) But would Oracle even want Salesforce.com, you ask, considering its teeny profit margin? I admit, that's not a great selling point. Ellison even said in a conference call with investors a few months ago that "no one has figured out how to make money off of SaaS." Still, Salesforce.com has other things to offer, and the first is mindshare. Most customers have been happy with Salesforce.com, and happy with the savings they get from the software-as-a-service model. About 5 out of 6 CIOs I talk to have at least some passing interest in SaaS. Whether it makes vendors high profits or not, Larry isn't going to stop the tide of SaaS, if that's what customers want. Salesforce.com has the reputation for quality SaaS, and has succeeded where others have failed. (By the way, what the heck ever happened to Siebel On Demand?) The second thing Salesforce.com has is....

4) Customers. Salesforce.com keeps piling them on, adding another 2,800 in the quarter to a total of 38,100. Benioff said in a conference call yesterday that Citigroup had signed on for 30,000 users of Salesforce.com sales and marketing software. Which gets us to how I think Ellison will make money off of SaaS: By buying Salesforce.com and up-selling and side-selling those customers with other things in what vendors like to call the "software stack." I don't know how much Oracle stuff Citigroup uses, but I'm sure Larry's got new things he could offer up from his growing bag of tricks. And some of that stuff in the bag is pricey licensed software, not that low-margin SaaS stuff.

Read on for more reasons why Oracle and Salesforce make a good match. What do you think? Will Oracle by Salesforce.com?

Mary Hayes Weier
mhayes@cmp.com
www.informationweek.com

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