Salesforce.com's new (and free) social networking tool

December 8, 2010: 1:01 PM ET

At Dreamforce, cloud-guru Marc Benioff converts Salesforce.com's most successful product -- social collaboration tool Chatter -- from paid to free.

Mr Dreamforce

Image by Simple Fox via Flickr

Marc Benioff wants to make enterprise software more like Facebook—social, viral and mobile. It's all part of the Salesforce.com CEO's master plan to extend beyond his core customer base, sales professionals.

That's why Salesforce.com (CRM) is launching a free version of Chatter, its social collaboration tool for enterprises. Benioff announced the new product at the company's annual user and developer lovefest in San Francisco on Tuesday morning, where he worked the crowd with his usual showmanship. (Highlights included pulling an iPad out of his pants and asking performer will.i.am what he thought of the cloud. The Black Eyed Peas vocalist said he's waiting for the day the cloud enables him to share music with his fans in real time, as he's creating it).

According to Benioff, the paid version of Chatter is already its most successful product to date. Salesforce.com's biggest Chatter customer is computer maker Dell (DELL), which has more than 100,000 employees connected, though it's not clear how many of them are active users.

The new Chatter does look and feel a bit like Facebook. It lets users create profiles, update their status and share files. It's also free, of course, and developed to be viral—employees can send their colleagues Chatter invites. Still, the paid version of Chatter (which costs $15 a month) comes with some extra bells and whistles, like allowing users to track business data.

To be sure, enterprise-focused social networks are nothing new. From large companies like Cisco Systems (CSCO) to small startups like Socialtext, everyone and their brother is trying to embed social tools into business applications.

What's more, social networking may be sexy, but Salesforce.com's flagship, cloud-based customer relationship management software is still the real moneymaker. Even Microsoft (MSFT) is gunning for Salesforce.com customers. Its latest move is promising a $200 rebate to customers who switch from Salesforce.com (or Oracle) to Microsoft's cloud-based customer relationship management software. It's also got a new ad slogan that aims directly at Salesforce.com: "Don't get forced. Get what fits."

Benioff is no stranger to taking jabs at competitors; he took quite a few at his former employer and current rival, Oracle (ORCL), while on stage at Dreamforce. And he's probably not too concerned about losing major customers to Microsoft's rebate program. Salesforce.com's recent quarterly earnings far exceeded analysts' expectations, and it recently raised its forecasts for the current quarter, telling investors its revenue for the three months ending in February 2011 would be in the range of $447 million to $449 million, 5% higher than analysts' median estimates.

Still, customer relationship management software is targeted at salespeople only, and Salesforce.com wants to get all levels of the enterprise using its cloud. So is social networking (or a cloud-based database for developers, another new product unveiled at Dreamforce), enough to take the "sales" out of Salesforce.com? Unlikely, but it's a good start.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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