Commoditized technology puts the on-demand player in a 'pretty strong' position.
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Oracle CEO Larry Ellison likes on-demand applications. The Salesforce.com investor owns more than 50 percent of NetSuite, which some may argue doesn't bode well for the smaller company, considering Oracle's plans to acquire Siebel Systems.
But the uncertainty surrounding Siebel CRM OnDemand (hosted by IBM) presents an opportunity, according to some industry pundits, for on-demand players, including NetSuite, RightNow Technologies, and Salesforce.com. "With the loss of Siebel, the winners are going to be the hosted solution providers," says George Goodall, research analyst at Info-Tech Research Group. Ellison contends that Siebel CRM OnDemand products "are improving at a very rapid rate" and that Oracle intends "to invest in them heavily." The same day he made those statements (on Sept. 12, when the proposed acquisition was announced), Siebel launched Siebel CRM OnDemand Release 9.
NetSuite CEO Zach Nelson, says that "the positive aspects are that the acquisition will create greater awareness for on-demand alternatives, which will increase deal flow," but he adds that NetSuite does not see Siebel CRM OnDemand as a competitor--his company targets a smaller user base. The acquisition "really does put NetSuite into a pretty strong position, especially as the technology itself becomes more and more commoditized," Goodall says.
Laurie McCabe, vice president of SMB insight and business solutions at AMI-Partners, agrees. "NetSuite is mostly competing with more of the midmarket players," she says. "The only way Oracle really affects NetSuite now is Larry Ellison himself, through funding."
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