(Note: After an award-winning career in the media business covering the tech industry, Bob Evans was VP of Strategic Communications at SAP in 2011, and Chief Communications Officer at Oracle from 2012 to 2016. He now runs his own firm, Evans Strategic Communications LLC.)
Congratulations on a great quarter, and particularly on topping a $10-billion annualized run rate! Your company’s relentless growth is powerful testimony to how much your customers value what you and your excellent team have delivered, and what they hope you’ll keep delivering well into the future.
So with all that goodness flowing from your Q2 results, I was scratching my head over the totally goofy comment you made in your press release officially announcing your Q2 numbers. You know, the one where you said Salesforce has become “the first enterprise cloud software company to break the $10- billion revenue run rate.”
But what about Microsoft, Marc?
I can’t imagine someone as intelligent and market-aware as you happened to forget that Microsoft, under Satya Nadella’s brilliant leadership, has made itself into a wholly legitimate “enterprise cloud software company.”
Oh, sure, they’re not bred to the cloud like you and Salesforce. However, business customers are more interested in what business value a cloud vendor can generate today as opposed to whether it was born cloud-native almost 20 years ago.
And today in the here and now, Microsoft plays fully and aggressively at all three layers of the cloud—SaaS, PaaS and IaaS—while your company only competes in two of those three: SaaS, where you’re an unquestioned leader, and PaaS, where your track record is not exactly stellar.
So some could argue—and I surely do—that by virtue of its all-in commitment to all three layers of the cloud, Microsoft is even more of an “enterprise cloud software company” than Salesforce is.
For example: take a look at this global map of Azure data centers that provide 42 distinct availability regions around the globe for the Microsoft Cloud—that offers enormous potential value to customers and has required many billions of dollars in investments from Microsoft—but you don’t consider them an “enterprise cloud software company?”
Let’s look at enterprise-cloud revenue as well because that was the core of your king-of-the-mountain argument: A month ago, Microsoft reported commercial-cloud revenue of almost $1.6 billion for the single month of June, whereas your company posted $2.56 billion in revenue for the three months including June. You might say that those big numbers for June are an aberration caused by a flurry of deals in the last month of Microsoft’s fiscal year.
While I don’t totally buy that aberration thing, I’ll play along—even if you cut that revenue figure for June by 50% (a ridiculously large adjustment) to try to “normalize” it, that would still leave almost $800 million for the month of June. And extrapolating that to a full quarter would give Microsoft a quarterly revenue figure of $2.4 billion, which—even with the make-believe “normalization”—is within spitting distance of your actual $2.56 billion. So what’s the wrinkle here, Marc? It looks like you believe at least one of the following is true:
Only SaaS revenue counts for a true “enterprise cloud software company.” Well that’s just silly.
- Microsoft is lying about its commercial-cloud revenue. That’s tin-foil-hat material.
- Office365 isn’t truly enterprise cloud—it’s just PC stuff. That’s delusional—particularly from the guy who 8-10 years ago began championing mobile devices and tablets as the new gateway to the enterprise.
- You’re trying to create controversy to shift the market’s focus away from Microsoft and Amazon and back to you and Salesforce. Not a bad gambit overall, but by making your case on the quicksand assertion that Microsoft’s not a legitimate “enterprise cloud computing company,” you’ve blown your shot.
- The sun was in your eyes and you didn’t mean to say what you said. That’s the most-plausible of all these possible explanations.
Marc, you know I present all this as constructive criticism and that I love what you and Salesforce are doing—after all, I’ve had you at #2 in my Cloud Wars Top 10 rankings ever since they were started in January.
I think the problem surfaced 9 months ago on your earnings call when you responded to an analyst’s question about possible momentum for Microsoft’s CRM SaaS app by saying, “We look at Microsoft, we sold more CRM software this quarter than Microsoft sold in the last decade. It’s just empirical.”
Is that claim true? Only Microsoft knows, because it doesn’t break out revenue by specific apps—but that’s not the point. That reply of yours showed that for the very first time, you had let Microsoft get inside your head. You—the peerless agitator—had been agitated, and by a company that, according to your own answer, had absolutely no chance whatsoever of threatening you.
Yet here we are, 9 months later, and Microsoft’s inside your head. Again.
Don’t let them do that to you, Marc—you’ve always been the one to set the agenda, not be forced into reactive (or just silly) positions.
You have made yourself one of the iconic leaders of not only the tech industry but also the 21st-century global business community by being the originator, the category-creator and category king (thank you, Chris Lochhead). And you’re well on your way to reaching $20 billion in cloud revenue by 2020!
You have always been the one to let your superb record of performance set the agenda as measured by what you did on the field, not by parsing terms and pretending you don’t fully grasp all the numbers.
Go back to that approach, Marc. Dream world-class dreams and make them come true, proclaim the new reality for the business-technology world and then make it happen, defy the petty and the safe and the mundane and make the world address your reality.
And as part of that, stop pretending Microsoft doesn’t exist. Because it does exist, and it is succeeding brilliantly and it is shaping the cloud-computing agenda the way you used to. And your attempt to play the child’s game of “if-I-cover-my-eyes-the-bad-guys-will-go-away” is beneath you.