Have been following the chatter closely on StockTwits, among the Enterprise Irregulars, and elsewhere after Oracle’s big miss. Here’s my 2 cents…
- Cloud/SaaS/OnDemand software (choose your buzzword) is a powerful long-termtrend – buyers are shifting strongly in this direction and it represents a tremendous market and investment opportunity. This is long-term bullish for flagship vendor Salesforce.com ($CRM) and a host of other companies. But…
- Oracle’s ($ORCL) big miss yesterday is a warning sign that the hardware business (which they entered with their Sun acquisition) stinks, and the on-premise apps business (Siebel, etc…) isn’t much better. Oracle is also, however, a major supplier to many SaaS companies (including Salesforce.com) so the move to the Cloud both hurts (short-term) and helps (longer) them.
- The economy stinks and budgets are extremely tight – I doubt that many if any software companies are expecting to wrap their Q4’s in a big way. 2012 is an election year so it’s almost a given that things will improve (although Europe remains a very big wild card). But if you’re an investor, it’s hard to believe that there’s any real rush to do more than watch and wait for things to stabilize.
Oracle and Salesforce are both well-managed businesses with significant market presence, strong products, deep ecosystems and a multitude of growth opportunities. I’m very confident that both companies – and others in the ecosystem(s) around them – will be fine long-term – both as businesses and as investment opportunities.
But for now, it remains pretty ugly out there. I plan to stay on the sidelines and enjoy the holidays, and will check back in early 2012.
and the on-premise apps business (Siebel, etc…) isn’t much better….
i disagree on the above. oracle CRM which is primarily Siebel CRM new license growth was up 20%, i think siebel on premise CRM is doing very well and will continue to do very well for more years…
Erh, are you serious!
Name me one SaaS vendor making decent margins – SFDC has been the tip of the SaaS hype bubble and does not make a profit and who’s share price is fast heading for a major tumble (they are currently offering customers 40% discounts to sign up with them – the kicker is these discounts are being offered on the basis they will remain in place even when their clients contracts renew – why would a successful company offer such discounts if there were not struggling?
To top this off we now see the likes of Gartner reporting a trend in early Large Enterprise SaaS adopters starting to head back to the On premise fold. This may explain all the recent SaaS vendors like SuccessFactor and RightNow selling up? I mean is SaaS not supposed to be the new holy land? If so, why are these firms not holding out and charting a course to be the next Oracle or SAP? Maybe it’s because they know that it’s time to cash in becuase a bubble is about to pop.
Don’t get me wrong, I am a strong believer in SaaS having a place at the table, but, we need to be sensible in reorganising that at the end of the day it’s just another deployment method providing customers a choice to either insource or outsource.
Cheers
Nicholas
PS forgive typos as comment typed out on my iPad while travelling in a cab whose driver seems to have a death wish 😉