Salesforce is skating to where the puck will be ahead of the other players once again–there’s a reason they’re so much bigger than the rest of the SaaS players.  This time it’s all about their latest development in the hotly contested PaaS (Platform as a Service) market.  They’ve introduced a fascinating new offering called “database.com” (what do you suppose they paid for that domain?). 

What is this database.com offering?

Larry Dignan pegged it best, among the various posts I read.  He says it’s a full frontal assault on the incumbents like Oracle, and that Salesforce is building out a stack, only the stack is delivered as a service that lives in the Cloud.  That’s exactly what’s happening.  Imagine writing software that talks to your database server via an API.  That part isn’t hard, because that’s how it already works.  Now imagine that you don’t own the database server; it lives in the Salesforce Cloud and you rent.  They take care of it and promise to use all the tricks they learned scaling Salesforce.com to make your database scale like crazy too.  Pretty cool!

The initial responses from the rest of the blogging world are also interesting:

– Phil Wainewright says they’ve squashed all the little PaaS players.

– Klint Finley reports that Progress software is building out drivers (ODBC, etc.) so your apps can directly call Database.com as their DB.

– Sam Diaz and many others are focused on the Oracle rivalry.  Can this be good for Oracle’s share price?  Will their database hegemony finally start to crack?  And what does it mean to the budding NoSQL world?

Obviously there is a lot of crystal ball work to be done here, and a lot of study of the available information.  Most of all, we’ll have to wait to get our hands on Database.com before we can really understand what it means.  But I did want to finish this post by talking about Database.com’s relationship to what I’ve been calling “Fat SaaS”.

We’re moving beyond the debate about SaaS versus On-premises.  On-prem isn’t dead, but it sure isn’t getting any stronger, while the SaaS world keeps gaining momentum.  The truth is that it is a superior model.  There used to be a lot of feeling that IT was afraid of it, and that this is what was holding it back.  But we’re starting to see considerable evidence IT not only doesn’t fear it, but that they’re embracing it wholeheartedly.  More importantly, we’re seeing the SaaS world start to move beyond simple questions (to multitenant or not to multitenant is actually a pretty simple question) and onto how to evolve to the next level.

Fat SaaS is a model that pushes as much business logic into the client as possible and leaves the server-side largely acting as a data store.  Given the availability of rich User Experience tools like Adobe Flex with AIR (for creating desktop apps), as well as the onset of the mobile app phenomenon, together with the difficulties of scaling in a multicore world, it’s a logical development.  After all, if you survey an Enterprise, do they have more cpu’s tied up in client devices, or in servers?  Which cpu’s are more over worked and which ones have more bandwidth available?

I’ve written about the Fat SaaS idea before, and I think it’s one of the logical next developments we’ll start seeing like crazy.  Database.com just opened the door to making it even more logical, because what else would talk to such a thing but a Fat SaaS application?  Doing a bunch of centralized number crunching won’t be nearly as happy as a Fat SaaS app with the inevitable latency that comes with having your database in a different Cloud than the software that’s consuming the data.  The client is already used to that being the norm.

Now, getting back to Phil Wainewright’s proposition that it has squashed the other players, I don’t think so.  It may be hard on the little players, or it may not.  Remember, Benioff is trying to out-Oracle Oracle.  But even Oracle hasn’t succeeded in squashing the Open Source DB movement, not even after acquiring MySQL.   It’s more popular than ever.  In the end, neither Salesforce nor Oracle have to squash these littles guys.  They’re after the higher end anyway. 

What I want to see is competition.  Who will be the first to put up a service on Amazon AWS that delivers exactly the same function using MySQL and for a lot less money?  You see, Salesforce’s initial pricing on the thing is their Achille’s heel.  I won’t even delve into their by-the-transaction and by-the-record pricing.  $10 a month to autheticate the user is a deal killer.  How can I afford to give up that much of my monthly SaaS billing just to authenticate?  The answer is I won’t, but Salesforce won’t care, because they want bigger fish who will.  I suspect their newfound Freemium interest for Chatter is just their discovery that they can’t get a per seat price for everything, or at least certainly not one as expensive as they’ve tried in the past.

I’ll be watching to see whether the prices come down and whether competition develops.  I fully expect both will be underway before we know it.  Meanwhile, Bravo Salesforce–you’re showing the rest of the world how it’s done!

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Good interview by Don Fornes of Eric Stahl, Director of PM for Database.com: