Last week, Microsoft bid a huge $55bn (£36bn) for Salesforce.com. The CRM leader rejected the bid, putting its value closer to $70bn (£46bn). Only Microsoft, or one of their competitors in the sector - Oracle or IBM, perhaps - could manage such a large figure.
So why does Salesforce think it's worth so much? Well, one answer is that Salesforce understands CRM much better than these old and traditionally dominant tech giants. Microsoft, Oracle and IBM are all trying to offer more services using Cloud computing and this is an area where Salesforce is extremely strong. The giants are used to buying out smaller companies that do things they haven't got a handle on yet.
Beyond that, Salesforce is inventive and isn't afraid of trying new things. It's won Forbes' Most Innovative Company award for the last four years. Part of that is down to how it's championed Cloud computing. This has meant that many small companies have been able to harness the resources of large companies, without paying so much.
But Salesforce famously hasn't made a profit since it was
founded in 1999. Is it really such an attractive potential purchase?
Well, like Amazon, it's mostly unprofitable because it reinvests most of
its revenue into growth. Last year, Salesforce spent nearly half of its
revenue on marketing. This strategy means the company pays less tax,
while still looking like a good investment, because its revenue
continues to grow.
If you're looking to get started with Cloud computing using Salesforce, we've got a great range of solutions to boost your revenue and growth.