Salesforce.com Sees Chatter Adoption Soar, Plans New Features

by Paul Shread

Salesforce posts strong earnings and sees stunning adoption of its Chatter collaboration and enterprise social networking service.

Salesforce.com (NYSE: CRM) shares soared late today after the company beat Wall Street estimates and raised its sales guidance for next year, but the most surprising news was the rapid adoption of its Chatter enterprise collaboration and social networking tool.

CEO Marc Benioff announced on the company's conference call that 60,000 of its 87,000 customers are now using Chatter — that's triple the number announced just three months ago, and an astonishing adoption rate for a product that's only been generally available since mid-year. The service is now the largest enterprise social network, he said.

Benioff said the rapid adoption is unlike anything he's ever seen for a product, and he said the company is "just getting going." He said 90,000 employees at Dell are using Chatter, and other large customers include the likes of Motorola, Nokia, Sony, Bank of America and Amazon.com. Yahoo is even using Chatter as a standalone service.

Chatter, which is free for Salesforce CRM customers, functions something like a Facebook for enterprises.

While Chatter's effect on sales is "not material," Benioff said "We really think we've found something that customers want and that makes us stronger in our existing customers."

Benioff said Chatter is taking the place of products like IBM Lotus and Microsoft SharePoint, which he said have fallen behind.

Benioff said the company plans a free stripped-down version of Chatter for customers to send "viral" invites, as well as a Chatter.com lead generation service. The "viral" version will be announced at the Dreamforce conference next month, and the Chatter.com service in the first quarter.

Just yesterday, Stifel Nicolaus analyst Tom Roderick said Salesforce appears to be positioning Chatter as the centerpiece of a vision that combines CRM, social media and collaboration. The broad adoption of Chatter certainly gives the company ample reason to build more features into it, as Roderick has predicted.

Benioff hinted that more is coming on the call, saying that users will "see things happening in a feed you have just never seen happen in a feed with any other product before."

Salesforce reported 30 percent sales growth for the quarter to $429 million, $19 million better than the Thomson Reuters forecast. Earnings of 32 cents a share were a penny better than expected. The company also forecast a better than expected $2 billion in sales next year.

Salesforce shares were up 7 percent to a new all-time high in after-hours trading, following a 5 percent gain during the day ahead of the company's results.

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  This article was originally published on Friday Nov 19th 2010
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