The signature conference of Amazon Web Services (AWS): ‘re:Invent’ has just concluded, leaving everyone with the realization that the undisputable leader is silently driving, shaping, and setting the “trend”, not just for the competitors, but for the entire cloud computing market. Year after year, the market leader is surpassing its own benchmark, by launching a plethora of services. The company continues to innovate in every possible way, to retain its leadership position and has always ensured that its audience leaves the conference impressed.
While the typical expectation from AWS is to continue down a certain path, the cloud leader has got the power to believe in a completely different direction, execute it, and also convince its stakeholders of its strategy. In that sense, its recent move of strengthening its partnership with Salesforce is quite thought-provoking. There has been plenty of evidence pointing to “Consolidation” in different forms, when a particular industry or market segment matures. Picking up on such cues from around, on what could be a possible, interesting, likely move by AWS, gets us to think – ‘What if AWS acquires Salesforce’, a move that seems to be a “huge” possibility.
It is well known that Salesforce has been leading in enterprise software and platforms, while AWS has been the leader in enterprise infrastructure. Both have been dominant in their own business segments, and an AWS acquisition of Salesforce, would further act as a catalyst for building and expanding Salesforce’s existing relationship with AWS. The combined entity would evolve to be the most complete and interesting technology vendor in the market in the current time, thus placing the peers on the defensive. Just the resultant customer base of ~ 11,50,000, the sum of 1 Mn+ customers from AWS and 150,000 from Salesforce, could be a massive threat.
With regard to their products/services portfolio, AWS and Salesforce could combine into a pre-integrated stack for enterprises. Salesforce may even decouple IaaS from its core SaaS offerings. Common product offerings such as IoT, Analytics and app services could be integrated and merged as one, as AWS has a history of offering only one simple service under each service category. Salesforce can gain from AWS’s financial strength and brand name, resulting in increased share value. It may not have to invest in setting up its own data centers, or rent infrastructure, or partner with another vendor, and can leverage AWS’ infrastructure to expand internationally.
AWS has presence across most regions of the world, and has the infrastructure to handle a large number of customers. However, it had been looking to add compelling enterprise customers in its portfolio, which it could win through the acquisition of Salesforce, as the latter has built itself a significant enterprise footprint. Gaps in AWS’ product offerings could be plugged through Salesforce services such as ERP, CRM and other capabilities built through acquisitions, including Heroku, Demandware, Quip, machine learning and AI capabilities.
From a competitive perspective, Microsoft competes with Salesforce in the field of CRM, and this acquisition could largely affect Microsoft’s market share and leadership position in cloud and ERP markets as well. Furthermore, Salesforce has a strong partnership with Oracle, and is a heavy user of Oracle databases. If the acquisition happens, Salesforce may give up Oracle IaaS. However, its partnership with Oracle for PaaS and SaaS may continue. Also, through the likely acquisition, AWS is expected to provide a bigger challenge to its competitors including Oracle, Microsoft, IBM, Google and other leading cloud players. Eventually, this combination might evolve into a Zero-sum game. Only time will tell.
AWS, being a leader in infrastructure cloud market, is looking out for strong enterprise customers in its portfolio. In that sense, Salesforce is an apt target for AWS as the former is a leader in enterprise platform and software, with solid enterprise customer base. They already are partners and over time it’s getting stronger with Salesforce moving its entire infrastructure to AWS. Hence, if this acquisition happens, there is a huge possibility of this combined entity to evolve as a complete and interesting cloud technology leader in the cloud market.
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