Salesforce.com (
CRM
) recently announced its FY Q4 2011 earnings in which it
mentioned that its Chatter application is gaining traction making
the company the largest provider of enterprise social networks in
the world. Chatter is an application that provides social
networking and real-time connection features for enterprises. We
believe Salesforce.com could use Chatter to expand its enterprise
customer base and up-sell its more valuable cloud-based products
like its customer relationship management (
CRM
) software and Force.com. Salesforce.com competes with SAP (
SAP
), Oracle (
ORCL
), Microsoft (
MSFT
) and IBM (
IBM
) in the CRM software market.
Below we will take a look at some of the comments made by the
management on Chatter during the earnings conference call. We
maintain a
$116 price estimate for Salesforce.com stock
, which is about 6% lower than market price.
Management bullish about Chatter and its
prospects
According to management, the Chatter application has gained
faster adoption with 80,000 of its 92,300 paying customers
deploying Chatter since its release in June.
Management states:
This makes Salesforce.com the largest provider of enterprise
social networks in the world. And now with Chatter.com, the free
and viral version of the service, we're looking to introduce the
power of the cloud to employees at every company around the
world.
As you know, Chatter is at the heart of our efforts to lead
the enterprise into Cloud 2. We see social computing as a
strategic new enterprise category, which is why this year you've
seen us deliver Chatter, Chatter Plus, Chatter Mobile, Chatter
Free and, at the Super Bowl, Chatter.com
Chatter helping enterprises with productivity
gains
The advantage that Chatter has over other social networking
sites like Facebook and Google (GOOG) Buzz is that it provides
additional security and privacy features. Having an enterprise
related social network on the same platform as Salesforce.com's
other tools will improve productivity and communication.
According to the management:
Customers using Chatter tell us they're thrilled of the
productivity gains and the open communication it brings to their
organizations. In a recent survey, we commissioned more than
6,000 global Salesforce.com customers. Users reported 28% fewer
medians, 33% less email, and a 49% increase in finding
information after deploying Chatter. Those are amazing
statistics.
Customers that have deployed Chatter within our sales and
service clouds also have shown higher log in rates and higher
usage rates as their employee spend more time and do more work
within our applications. These are amazing results from a
technology that is literally just months old. We are so delighted
to see such strong results from the Chatter technology.
DimDim acquisition to enhance Chatter
capabilities
We discussed about how DimDim acquisition will enhance Chatter
capabilities in our earlier note titled
Chatter Network Can Help Salesforce.com Up-Sell
Other Cloud-Based Products
. The company will likely add
web-conferencing capabilities to the Chatter application
presumably in the form of a browser-based web conferencing platform
based on an open-source platform (and would not require the
installation of any software).
According to the company:
Dimdim brought us technology we will use to immediately
accelerate the development of Chatter, adding vital communication
capabilities such as screen sharing, messaging and presence, to
mirror the proven Facebook models combining communication and
collaboration into an integrated service.
See our full analysis and $116 price estimate for
Salesforce.com