Salesforce Eyes the Growing Internet of Things Market
Salesforce.com, Inc (NYSE:CRM) [stockdata ticker=”CRM”] unveiled its grand plan to capture the internet of things market during the Dreamforce 2014 conference. Salesforce announced its new Salesforce 1 platform, which will be crucial to its vision of the “internet of customers.”
Analysts predict that the cloud computing market will expand to become a $191 billion market by 2020. Last year, the net market size of cloud computing was $58 billion. Salesforce’s current business model can be best described as Software as a Service (SaaS). However, in the Dreamforce 2014, the company came up with its bold vision to offer fringe cloud services alongside its core product offerings to its growing customer base.
This is not the first time the SaaS business solution provider talked about its intention of becomming involved in the internet of things market. Salesforce Chief Operating Officer Marc Benioff described his dream about oral hygiene in the era of the internet of things back in November 2013. His vision, as he mentioned, was that in future, toothbrushes would be Wifi connected and have GPS. It will gather data about the oral care and share it with the user’s dentist. Hence, the dentists can better examine their customer even before they pay them a visit.
The catch is that Salesforce will act as the data broker on the cloud between the dentists and their clients. Or, the toothbrush maker and the buyer by offering customer data to vendors, customer service, and a broad range of market software over the Internet. This is Salesforce’s vision about the “Internet of Customers.”
Salesforce.com Inc (NYSE:CRM) [stockdata ticker=”CRM”] has increased its revenue by 2920 percent during the last 10 years and it stands as a testimony to the company’s innovative capability. Its plan to provide data service to the internet of things industry should come as positive news as it offers the company a new channel for delivering further growth.
Salesforce’s only problem, or rather challenge, in the short term will be to maintain profitability by managing growth. While the company rapidly increased its sales and scope of service with healthy gross profits, its EBITDA had been negative for the last few quarters. Most of its profits are being re-invested to fuel the growth. It is fine as Salesforce is growing fast and it will not have a problem getting funds from financing as its cash flow from operation is growing faster than its revenue.