Welcome to the Cloud Wars Minute — your daily cloud news and commentary show. Each episode provides insights and perspectives around the “reimagination machine” that is the cloud.
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In today’s Cloud Wars Minute, I explore Salesforce’s transformative shift towards prioritizing higher margins and positioning itself as a data company,
Highlights
00:24 — Salesforce’s Marc Benioff has pivoted in some ways the persona, position, and positioning of the company. He’s very intent on delivering higher margins. On last week’s earnings call, I think Benioff did a soft opening of the new position for Salesforce.
01:05 — He said, “We are a data company now.” He also said, “We’re the biggest enterprise apps company.” Here’s why I believe that this is a profound comment. Salesforce is the number one enterprise apps company, with almost $35 billion in revenue. But for the coming 12 months, for the whole year, Salesforce is guiding to only 8 percent or 9 percent growth.
02:26 — Now, how can that be with its incredible success, track record, and great products? I think it’s a realization on Benioff’s part. That is, he said, “We’ve had a lack of synergy across our different, what I’m going to call, legacy clouds . . . ” Benioff openly admitted, “We have not made it easy for customers to use multiple clouds.” Now Data Cloud is going to be the fix.
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03:20 — I think Benioff is trying to anticipate where the industry is headed and jump forward into that. There’s a pretty clear indication that things at Salesforce need to change and Benioff is recognizing that. He said that, right now, we are in the single most important moment in the history of the tech industry with this AI revolution.
03:58 — Every CEO in every business is all out for this and is willing to open up the pocketbook to pay for this. Salesforce is growing, expected to grow in the coming year, just 8% or 9%, way lower than almost any other Cloud Wars Top 10 company.
04:19 — President and Chief Operating Officer Brian Milham said we’re pairing up with McKinsey. And these are his words, “to increase the C-level relevance of our products.” I was struck by that. So, C-level folks don’t currently see Salesforce’s different clouds as highly relevant? It’s a peek under the hood of the company’s forecast.
