The deal was worth between $10 million and $20 million, according to a closely involved source.

Clipboard had raised about $2.5 million in seed funding from investors including Andreessen Horowitz, Index Ventures, CrunchFund, SV Angel and Betaworks.

So while the deal was a successful outcome, it could also be attributed to today’s “Series A Crunch,” where raising additional money is a challenge, said the source.

All but one of Clipboard’s five-person team will join Salesforce’s Seattle office, but they will be shutting down their own tools in favor of integrating similar functionality into Salesforce products.

Clipboard CEO Gary Flake is a respected tech research executive with history at Microsoft, Yahoo and Overture.

Clipboard told users about the shutdown today, saying the service would end on June 30 but users could download their data.

Calling the news “bittersweet,” the company disclosed it had 140,000 users over the past two years.

Image copyright Cartoonresource

However, there is a revolution brewing in the enterprise and it’s starting right at the desk of the chief marketing officer (CMO). The way that products are purchased is being disrupted, and this is forcing the CMO to catch up. Buyers are now in control of the buying process and their behaviors are growing increasingly unpredictable. As such, marketers must strive to be everywhere buyers are; and to do so, marketers are starting to use data-driven automation to reach and address the needs of prospects wherever they may be in the buying process.

The changes that this revolution will bring over the next decade to support new marketing strategies will drive tens of billions of dollars of investment and innovation to the bottom lines of hundreds of thousands of companies around the world. The top marketing technology players — including Salesforce.com, IBM, Oracle, SAP, Microsoft, Google and Adobe — see the impending fight, and the war to own the marketing technology market has begun to play out. Battle lines are being drawn, and they center on the customer relationship management (CRM) system.

CRM as the system of record

Salesforce has been spending much of the last decade building its CRM system. Since more than 75 percent of the companies that use Salesforce are B2B, the company’s CRM platform is arguably the system of record for the B2B marketer. This puts Salesforce, as the fastest-growing scaled vendor in the space, in the driver’s seat to become the platform where marketers keep their treasure trove of prospect and customer information and interaction data. Oracle, NetSuite, IBM, Google, SAP — and arguably even Facebook, LinkedIn and Twitter — don’t want to see Salesforce have the lock on such valuable data. To fend off the Salesforce threat, these companies are developing their own audience data strategies, ranging from aggressive acquisitions to building cookie data exchanges, or even building their own social networks (if they’re not one already). As each realizes, the vendor that controls audience data “wins” because all marketing decisions are keyed off of this information.

With the CRM system as the system of record, seamlessly connecting all of the marketing systems in an enterprise, executing programs and then measuring success becomes possible — once the right data can be plugged in. For example, today’s marketing automation systems sync with CRM systems so that as a salesperson moves prospects from leads to qualified opportunities, the marketing system can automatically send a different messages to each prospect, depending on what stage they are in within the marketing funnel.

However, integration currently ends there and the marketing organization is unable to easily tie the opportunity for unique messaging into any other marketing channel — such as SEM, social media or display advertising. The next step needed is an integration of all of these activities. In the above example, once the salesperson moves a prospect from a lead to a qualified opportunity within the CRM system, the move would trigger display advertising and social media marketing that syncs creative and messages across all channels in real time, and then adds the prospect’s interaction with each mechanism back to the CRM record. Scalable, measurable, one-to-one marketing that requires no additional marketing resource is the result.

What’s next?

The incentives for marketers to realize the holy grail of right message, right place and right time are clearly in place. So what’s getting in the way of all this progress from happening immediately? Two big areas have slowed progress: Integration of data across multiple systems in the enterprise, and privacy. The vendors duking it out for ownership of data — Salesforce, Oracle, et al — have begun work with data platforms to solve the integration issue. Privacy, however, remains a concern. The argument goes: If consumers don’t know what you’re using this information for, you shouldn’t be using it. This is a fair and reasonable argument, and in the CRM world where customer and prospect information is tied to personally identifiable information, it is going to be important that consumers opt in to the information being collected by the marketer. The tradeoff is similar to the one made today in loyalty programs such as grocery store or airline frequent flier programs: You give a company the ability to track your purchases and incentivize you to buy more through discounts and coupons, and they will give you a better experience as a customer.

The future of enterprise marketing is one in which consumers benefit from transparency concerning where and how their data is being used, and through improved, more relevant experiences from vendors, service providers and favorite retailers.

To this end, expect the battle for data to continue as enterprise giants fill their platforms while trying to deliver the CMO increasingly sophisticated and integrated capabilities. Unprecedented efficiency in marketing will result, increasing growth and profits for the enterprise as more dollars become available for investment. The promise of true one-to-one and completely measurable marketing has been a long time in the making. It’s coming fast, and it’s going to transform the enterprise over the next decade.

Russell Glass, CEO of Bizo, is a serial technology entrepreneur, having founded or held senior positions at four venture-backed technology companies. Prior to Bizo, Russ led the marketing and product management teams at ZoomInfo, a business information search engine, where he sharpened his B2B marketing skill set and developed his love for business data.

1. Apple’s Ouster of AppGratis Is Just the Start of an App Store Crackdown
2. Confirmed: Apple Kicks AppGratis Out of the Store for Being Too Pushy
3. Yep, LinkedIn Acquires Newsreader Startup Pulse for $90 Million
4. WhatsApp: We’re Not Selling to Google
5. Twitter’s New Music App Launches Friday
6. BlackBerry Tops iPhone and Android … In a “Don’t Want” Poll
7. Salesforce Just Made Another Quiet Acquisition

[note: this article is from February, but resurfaced this week]

8. PC Sales Show Biggest Q1 Decline Ever
9. California Court: Even Checking Maps on Phone While Driving Not Okay
10. News Corp. Threatens to Pull Fox off the Airwaves if Aereo Wins

For more of the week in review, you should follow us on Facebook and Twitter.

Image copyright Maksym Darakchi

According to “new replaces old” assumptions, the mainframe computer would be long deceased. We all know that’s not the case. I recently met with the CIO of a large, well-known insurance company, who said that for 20 years the company has tried to reduce its reliance on mainframes. The problem is that the company runs several complex processes and algorithms, built by people who have since retired, on those systems. Everybody knows that they work, but nobody really knows how they work, which is why they’re still around two decades later.

Shocking as it may seem, enterprise software giant BMC’s mainframe software revenue is on the rise, thanks largely to scenarios such as the one my friend at the insurance company is dealing with. And remember Lotus Notes? According to The Wall Street Journal, it’s still a $1 billion business, too rooted for large companies to walk away from, and too large for IBM to ignore as it expands into cloud and social software. BMC and Lotus Notes are important lessons for investors, CEOs, strategists and anyone tempted to write off the old guard, at least in the near-term. There’s a rhythm to when and how quickly technologies are replaced — and it’s driven by three factors: product cycle, adoption time and entrenchment.

Product Cycle: The longer it takes for a company or industry to release the next version that is significantly different, the more staying power the technology will have. Product cycles in PC operating systems are a great example. Windows XP was current for more than six years, and Oracle releases a new database every four years or so. All of those technologies endure in business today.

Adoption Time: If something takes a long time to deploy or adopt, it usually takes a long time to replace. SAP is notoriously long to implement, which means it takes companies an agonizingly long time to replace the software with cloud-based alternatives, no matter how superior they may be.

Entrenchment: The large insurance company stuck with the mainframe that I mentioned earlier is the perfect example of entrenchment. Those mainframes are so complex and pervasive throughout the company, they’re difficult — and sometimes impossible — to abandon. It’s not just the old guard that is entrenched, however. Salesforce.com is relatively quick to deploy, but businesses quickly integrate it deeply in the sales process and with various applications — many built on the Force.com platform, making Salesforce.com much stickier than many people originally thought it would be.

Cloud computing, the industry I’ve worked in for the past decade, is another cautionary example. It’s common in my industry to predict the “death” of legacy on-premises technologies such as Oracle and SAP. This is overly simplistic thinking, the result of people who try to fit a complex world into a convenient narrative. The cloud is undoubtedly marching toward pervasiveness in all layers of the IT stack. It will take longer than people think, however, and the old guard won’t die. In reality, they’ll gradually become less relevant, until some day, in some blog post, people will be surprised by how much legacy software remains in the world even though the new guard has long surpassed it.

At Okta, we’ve learned this lesson from our customers, many of which are larger enterprises experimenting with the cloud but that have legacy software that won’t disappear overnight. The software is too entrenched in the system, as it typically takes months — and often years — of accumulated consulting, training and implementation hours to install.

Eventually, the cloud will be home to all of the innovation and profit, but it won’t be the whole pie. Investors looking to place bets on where technology is headed (and when) and vendors plotting strategy shouldn’t get caught up in the hype. The SAPs and Oracles of the world will linger and limp along.

They won’t go gently — no matter how hard we might try.

Todd McKinnon is CEO of Okta, an enterprise-grade identity management service that addresses the challenges of a cloud, mobile and interconnected business world. You can follow him on Twitter at @ToddMcKinnon.

Good as it may be — and lots of people like it — it is not without its critics. Many sales pros spend the majority of their time away from their desks and are relying increasingly on mobile devices to access their customer data. Plus, when it comes to adding information about the customer to the software, there’s a lot of typing involved. That gets old pretty quick.

Enter AppMesh, a startup led by two former Salesforce execs, Leo Tenenblat and Tom Tobin, who are aiming to rewrite the rules of CRM software with the iPhone and iPad in mind. Data available on one device syncs up across the others using whatever connectivity is available at the time. And users can also export their current data from Salesforce itself. (Getting info from AppMesh into Salesforce isn’t possible. Yet.)

The other thing AppMesh does is sync up with calendars and email. If one deal is potentially bigger than another, email about the larger deal will be placed atop the inbox where it can be acted on first. Go and see a customer, and AppMesh tracks information about the interaction by tagging it with location data.

It’s available now for the iPad and iPhone. Support for Android is coming. It’s in the App Store starting today.

And like any company going through a growth spurt, Twitter’s organizational structure has become complicated.

The company has tried breaking into multiple departments with various leaders. But as time has passed and Twitter has scaled, roles have grown confused and inefficient, and communication between some of the departments has suffered.

This is important. Some say the company thrived in its early days from its loose-knit structure, but also suffered from a clashing of big personalities, a revolving CEO seat and defecting employees across the ranks. But as the company continues its slow, steady trudge toward going public, the Twitter of today is trying to be a different animal entirely. That means working out the kinks that still exist inside its organizational makeup, and proving to the public — and the Street — that yes, Twitter is in this for the long haul.

Making this adjustment will also mean clarifying the vision of what Twitter, the product, is, and what it is meant to be. That means faster shipping of new releases, faster decisions being made, and ultimately (hopefully), a happier user base.

To remedy the most recent issues, Twitter made significant structural changes to a number of departments earlier this month, shuffling around key managers in the hope of streamlining some of the more dysfunctional aspects of the company’s interdepartmental communication.

This is likely a good thing — or Twitter wants it to be, at least. But looking back, one thing is clear: It has been a long time coming.

Twitter, not unexpectedly, declined to comment on this story.

The Old Guard

This whole thing began nearly a year and a half ago, when CEO Dick Costolo and Chairman Jack Dorsey started cherry-picking talent from some of the Valley’s top firms. They plucked away Google engineers by the handful, recruiting hundreds of them to staff Twitter’s large engineering operations (Costolo has said more than half of Twitter is made up of engineers).

The idea back then was to restaff some of the key positions in the company with seasoned vets across the four major departments — Product, Design, Engineering and Revenue — the heads of which would report directly to Costolo.

Twitter Product VP Michael Sippey

But the old layout, as it was set up, was complicated. Former SAY Media vet Michael Sippey led as VP of consumer product development, while Othman Laraki was VP of product growth. Revenue had Adam Bain as president of global revenue, with Kevin Weil as his deputy of sorts, acting as director of revenue product. Design was led by Doug Bowman, but then Andrei Herasimchuk was promoted later to become overall director of design, while Bowman continued as creative director.

Lastly, Adam Messinger was poached from Oracle to join as VP of engineering infrastructure in November of 2011, while Chris Fry was brought on in April of 2012 for another key engineering role.

So that was the lay of the land. Costolo had his lieutenants, who ideally would handle things smoothly and hand up the high-level stuff to the top. But as became evident shortly thereafter, that didn’t work out.

It’s Complicated

First of all, it’s tough to have too many cooks in the kitchen. And despite the fact that this layout seemed to be streamlined, there were too many people reporting to Costolo at any given time.

As one insider told me, “This was a mess. One year ago, Dick had four product and design reports and three engineering reports.” In other words, seven different department heads, each with Costolo’s ear.

Beyond that, there were some issues inside of a few departments that contributed to stumbles in workflow.

Design

The Design department has been dysfunctional for a long time. Earlier days saw an “overall lack of process and structure,” another person told me, and a series of new managers may have been an overcorrection, from Doug Bowman to a period with Dorsey’s heavy involvement, then to Andrei Herasimchuk after his promotion.

Design VP Mike Davidson.

Thus, Mike Davidson, a veteran designer who was founding CEO of Newsvine (acquired by NBC), was picked last autumn by Sippey and Messinger to refocus the department. There have also been a series of smaller departures inside the department, and one big one — Andrei Herasimchuk left just a week after Davidson’s appointment.

I’ve been told by multiple people that the design process has improved significantly under Davidson’s reign over the past five-plus months, and he has brought in multiple new hires from the likes of Apple, Facebook and startup PicPlum. He has also increased the department size by 30 percent since his arrival.

What remains to be seen, however, is how much Davidson will improve the output of the overall department.

Engineering

The Engineering department had its own problems. And the setup has been somewhat peculiar.

Adam Messinger was poached from Oracle to act as VP of infrastructure engineering in November of 2011. But at some point along the way, Messinger switched over from infrastructure to VP of application development — essentially a product position. That’s something of a head-scratcher, because Messinger’s background isn’t in consumer products, but infrastructure — the very thing he was hired on to do.

Twitter CTO Adam Messinger

Through all of this, Design was reporting to the Engineering department instead of acting as an independent function as it once used to.

Everything Old Is New Again

So despite Twitter’s grand organizational plan set out last year, things weren’t working out. Design reporting to Engineering just wasn’t working. Engineering leadership was muddled. Costolo had too many people to listen to in order to get things done. As one insider told me, it was “a mess.”

So as of mid-March, there’s a new New World Order at Twitter, a long-overdue “consolidation and clarity in the company,” as one source put it.

Now, according to sources, the structure has been trimmed down to a handful of go-to VPs reporting to Costolo, including Michael Sippey, Chris Fry, Kevin Weil and global revenue president Adam Bain.

Sippey is getting the biggest bump. Laraki left Twitter at the end of 2012 to work on his own thing. Sippey is now vice president of Product and Design, overseeing both departments.

Senior Vice President of Engineering Chris Fry

Fry also gets a radical step up in his responsibilities. He’s now senior vice president of overall engineering. He’ll also work closely with Alex Roetter, who is now a VP in the Engineering department, working on international, growth and revenue engineering. Kevin Weil will continue to act as director of product in the revenue department.

Messinger is the man spun off here, announced last week as chief technical officer of Twitter. It’s curious, though; sources said that in his new position, Messinger lost many — if not all — of the staff directly reporting to him, which would make it seem a less-than-desirable position to be in. I’m also told that Messinger had issues with recruiting enough engineers, a serious problem at an organization of Twitter’s size and scale. Recruiting, as any tech company will tell you, is of the utmost importance.

Of course, it could be that Messinger is better as a high-level thinker, as I’ve been told — someone who would do better focusing on the “big-picture” aspects of Twitter and what it will look like in the future, rather than down in the engineering trenches. Still, perhaps Messinger won’t be satisfied with the high-level CTO role in a few months, and depart for other pastures. (TBD on that one.)

To Be Continued

So that’s that. For now, most of the shifting is kaput (as far as I’m aware), and as it has been put to me, the Sippey/Fry combo is the “new world order in charge of the roadmap,” while Weil and Roetter will hold down the revenue product and engineering duties. (There were one or two other noteworthy shifts as well, including moving Raffi Krikorian up to VP of engineering in charge of Twitter’s platform.)

If all goes according to plan, you’ll hopefully see Twitter-the-product get better on a much faster-paced timetable.

Will it all work better than the previous layout? I don’t know, and I’m sure Twitter doesn’t either. We’ll have to check back in another year.

For the most part, what they’ve been doing up to now has been social media monitoring, which means listening to what people say on Facebook and Twitter and blogs. What you decide to do based on what you see people saying is pretty much up to you. The big leader in this business is Radian6, which Salesforce.com acquired in 2011, and which forms the backbone of Salesforce’s Marketing Cloud.

But there’s a new player that has been attracting notice. New York-based Tracx — pronounced “tracks” — has been doing business with companies such as Coca-Cola, Kraft, Samsung and Sears. Today, it will announce that it has landed $3.5 million in venture capital funding in an extension of a Series B round announced last year. Flybridge Capital is leading the round, and early investors Revel Partners and Rutledge Partners also participated. The round brings Tracx’s total capital raised to $9.5 million.

The funds will be used to boost Tracx’s go-to-market efforts around Social Leads, its cloud-based product for tracking and sorting through social media traffic and determining where the business opportunities are.

I talked with CEO Eran Gilad today, and he described what Social Leads — now in a final beta, and set for release in April — does. Basically, once you see someone talking about a product or a service or a brand on social media, it ranks what they say according to where they may be in the buying process. As Gilad puts it, not all actions on social media are alike. “A ‘Like’ on Facebook isn’t as important as a comment on Facebook,” he said.

Potential sales leads get organized based on where they appear to be in that process of making a buying decision. Are they actively doing research, or are they just curious? Or are they commenting on something they’ve already bought?

Once a prospect is identified, you can see all their accounts on Twitter, Facebook, their blogs and so on, for more insight into what they may be thinking or doing and to learn a bit more about them. You can also track conversations by geography, and see what people in one city are saying versus those in another.

From there, sales pros can jump right into action, making a sales pitch or shifting marketing spends based on what may be causing the conversation to happen in the first place. There’s no days-old static report; data is real-time. And data is visible to any person in the company, not just the sales and marketing teams: Someone on the product development side, for example, might see something in the comment streams that yields some critical insight and an important change to a product.

Tracx also talks to other tools that companies use, like Omniture and Google Analytics.

So far, more than 250 companies are using Tracx, and sales at Tracx were up 4x in 2012. The company moved its headquarters from Israel to New York last year, and now employs 50 people.

Sales were $835 million, up 32 percent over the year-ago period, and were well ahead of the $831 million that had been the consensus expectation of Wall Street analysts. Earnings per share on a non-GAAP basis were 51 cents, 11 cents above the consensus of 40 cents. On an old-school GAAP basis, like most cloud companies, Salesforce lost $20.8 million, or 14 cents a share. Salesforce shares rose by more than $6, or nearly 4 percent, in after-hours trading.

The company also finished its fiscal year with more than $3 billion in sales, a goal that CEO Marc Benioff (pictured) had set last year.

Here’s Salesforce’s original announcement:

Salesforce.com Announces Fiscal 2013 Fourth Quarter and Full Year Results
- Quarterly Revenue of $835 Million, up 32% Year-Over-Year
- Full Year Revenue of $3.05 Billion, up 35% Year-Over-Year
- Deferred Revenue of $1.86 Billion, up 35% Year-Over-Year
- Unbilled Deferred Revenue Increases to Approximately $3.5 Billion
- Full Year Operating Cash Flow of $737 Million
- Raises FY14 Revenue Guidance to $3.82 – $3.87 Billion
- Initiates FY14 Non-GAAP EPS Guidance of $1.93 – $1.97

SAN FRANCISCO, Feb. 28, 2013 /PRNewswire/ — Salesforce.com (CRM), the enterprise cloud computing (http://www.salesforce.com/cloudcomputing/) company, today announced results for its fiscal fourth quarter and full fiscal year ended January 31, 2013.

“Salesforce.com had a spectacular finish to its fiscal year. We delivered more than $3 billion in revenue and constant currency revenue growth of 37%,” said Marc Benioff, Chairman and CEO, salesforce.com. “Salesforce.com continues to be the fastest growing top ten enterprise software company in the world.”

Salesforce.com delivered the following results for its fiscal fourth quarter and full fiscal year 2013:

Revenue: Total Q4 revenue was $835 million, an increase of 32% on a year-over-year basis. Subscription and support revenues were $785 million, an increase of 32% on a year-over-year basis. Professional services and other revenues were $49 million, an increase of 31% on a year-over-year basis.

For the full fiscal year 2013, the company reported revenue of $3.05 billion, an increase of 35% from the prior year. Subscription and support revenues were $2.87 billion, an increase of 35% on a year-over-year basis. Professional services and other revenues were $181 million, an increase of 29% on a year-over-year basis.

Earnings per Share: Q4 GAAP net loss per share was ($0.14), and non-GAAP diluted earnings per share was $0.51. The company’s non-GAAP results exclude the effects of $108 million in stock-based compensation expense, $21 million in amortization of purchased intangibles, and $6 million in net non-cash interest expense related to the company’s convertible senior notes, and is based on a non-GAAP tax rate of approximately 29%. GAAP EPS calculations are based on a basic share count of approximately 145 million shares. Non-GAAP EPS calculations are based on approximately 153 million diluted shares outstanding during the quarter, including approximately five million shares associated with the company’s convertible senior notes.

For the full fiscal year 2013, GAAP net loss per share was ($1.92), and non-GAAP diluted earnings per share was $1.63. The company’s non-GAAP results exclude the effects of $379 million in stock-based compensation, $149 million related to the one-time tax valuation allowance established in the fiscal third quarter, $88 million in amortization of purchased intangibles, and $24 million in net non-cash interest expense related to the convertible senior notes, and is based on a non-GAAP tax rate of approximately 33%. GAAP EPS calculations are based on a basic share count of approximately 141 million shares. Non-GAAP EPS calculations are based on approximately 149 million diluted shares outstanding during the year, including approximately four million shares associated with the company’s convertible senior notes.

Cash: Cash generated from operations for the fiscal fourth quarter was $282 million, an increase of 17% on a year-over-year basis. For the full fiscal year 2013, operating cash flow totaled $737 million, up 25% year-over-year. Total cash, cash equivalents and marketable securities finished the quarter at $1.8 billion.

Deferred Revenue: Deferred revenue on the balance sheet as of January 31, 2013 was $1.86 billion, an increase of 35% on a year-over-year basis. Current deferred revenue increased by 39% year-over-year to $1.80 billion, benefited in part by longer invoice durations. Non-current deferred revenue decreased by 27% year-over-year to $64 million. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the fourth quarter at approximately $3.5 billion, up from approximately $2.2 billion at the end of the fiscal 2012.

As of February 28, 2013, salesforce.com is initiating revenue and EPS guidance for its first quarter of fiscal year 2014, and initiating EPS guidance for its full fiscal year 2014. In addition, the company is raising its full fiscal year 2014 revenue guidance previously provided on November 20, 2012.

Q1 FY14 Guidance: Revenue for the company’s first fiscal quarter is projected to be in the range of $882 million to $887 million, an increase of 27% to 28% year-over-year.

GAAP net loss per share is expected to be in the range of ($0.44) to ($0.42), while diluted non-GAAP EPS is expected to be in the range of $0.40 to $0.42. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $113 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $24 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $7 million. EPS estimates assume a GAAP tax rate of approximately negative 59%, which reflects the estimated quarterly change in the tax valuation allowance, and a non-GAAP tax rate of approximately 35%. The GAAP EPS calculation assumes an average basic share count of approximately 147 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 158 million shares.

Full Year FY14 Guidance: Revenue for the company’s full fiscal year 2014 is projected to be in the range of $3.82 billion to $3.87 billion, an increase of 25% to 27% year-over-year.

For the company’s full fiscal year 2014, GAAP net loss per share is expected to be in the range of ($1.22) to ($1.18) while diluted non-GAAP EPS is expected to be in the range of $1.93 to $1.97. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $503 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $85 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $27 million. EPS estimates assume a GAAP tax rate of approximately negative 54%, which reflects the estimated annual change in the tax valuation allowance, and a non-GAAP tax rate of approximately 35%. Due to the tax valuation allowance, however, the GAAP tax rate could be volatile and is therefore difficult to forecast. The GAAP EPS calculation assumes an average basic share count of approximately 150 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 161 million shares.

As Benioff keynotes go, this one has been described to me as “understated.” Rather than occupy a huge venue like the Jacob K. Javits Convention Center, Salesforce is holding this event at the Waldorf Astoria Hotel. Rather than a three-hour revival meeting, it will be a simpler one-hour address. It’s as though a big-name rock singer known for big stadium concert blowouts has shifted to the coffeehouse circuit.

Expect to hear the words “service” and “mobile” a lot. Salesforce made an announcement overnight about what it calls its Service Cloud. It has been adapted to run natively on mobile devices like the iPhone and iPad. The idea is that customer service reps or any other customer-facing employee can use a mobile device to help customers get the help they need or buy the stuff they want, regardless of how and when they present themselves.

One feature due later this year is called co-browsing. It allows customer-facing reps to engage in what Salesforce describes as a “shared Web experience,” basically browsing together. That pair of shoes you want but can’t seem to find, or that pair of slacks in your size? Sales or service reps can help you find it, and can see what you see on whatever screen you happen to be using.

A big theme of Salesforce’s assumptions and positioning will be around customer expectations. All of us are so used to having access to everything within seconds; when we’re customers we get impatient when we have to wait for someone else to track down whatever it is we need.

A couple of other new additions to the Service Cloud are aimed at addressing that. Mobile Service Cloud Communities give companies a way to build a single place where customers can get answers, either by way of self-help, other people or via company experts.

Another is an instant chat capability. The example I was given here is a clothing store. Say you’re waiting for an alteration. You check with the store, and the sales rep who takes your call is able to contact the tailor working on it directly, who tells you it will be ready in a few hours and you can pick it up on your way home from work.

What you won’t hear Benioff talking about is how the social enterprise is going to change the world. That message is so 2012, and has more or less played itself out.

But you can’t argue with the performance of Salesforce shares. They’re up by more than 34 percent since hitting a recent low in August. They closed Monday at $163.51. And the company looks on track to deliver its planned four-for-one share split. That, at least, is a message most shareholders can get behind.

1.) Salesforce CEO Benioff Invites Laid Off Yammer Employees to Work for Him

2.) Microsoft Could Make Billions From Office for iPad

3.) Apple Working on Fix for iOS 6.1 Passcode Hack

4.) American Express Cardholders Can Now Tweet to Buy

5.) HBO to Finally Let Subscribers Stream HBO Go to TV Over AirPlay

6.) A Big Year for Apple’s iPhone in India

7.) Bill Gates on Philanthropy, Steve Jobs and the Microsoft Product That Never Was

8.) Yes, Intel Is Building a Web TV Service (A Box, Too)

9.) The Cloud’s Dirty Little Secret

10.) Apple MacBook Pros With Retina Display Get Faster, Cheaper

For more of the week in review, you should follow us on Facebook and Twitter.

Hello, and happy Read In the Bathtub Day! (AllThingsD takes no responsibility for any damage to your electronics caused by reading this post in the bathtub.)

Here are our top 10 stories from the week of 2/4:

1.) Coming Soon to Yahoo: Ads From Google

2.) Twitter Got Hacked. Expect More Companies to Follow.

3.) Surface Pro: Hefty Tablet Is a Laptop Lightweight

4.) A Tasty Little Slice of Geek History: PBS’s “Silicon Valley” (Video)

5.) Samsung’s Super Bowl Ad Leaves Apple Alone

6.) In One Fell Swoop, Facebook Glitch Deep-Sixes the Web

7.) BlackBerry Z10 Off to a Strong Start in U.K.

8.) Why Twitter Is Buying Bluefin — And Why Bluefin Is Selling [Sidebar: Bluefin will also be presenting at D: Dive Into Media next week.]

9.) Salesforce Just Made Another Quiet Acquisition

10.) Nudged by Apple, Twitter’s Porn Saga Ends in a Raw Deal for Vine

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Salesforce shares have been on a tear of late and touched a 52-week high of $175.74 today, closing at $173.86, up more than 47 percent from where they were trading a year ago. The proposal would boost the number of shares from 405 million now to 1.6 billion. It would also push the number of shares owned by CEO Marc Benioff, the company’s largest non-institutional shareholder, to north of 40 million shares from about 10.2 million shares now.

The thinking about the split, Salesforce says in the filing, is to keep the shares affordable for mainstream investors. At $43 and change, a share of Salesforce would be easier to justify buying than it is at $173 and change. It also makes stock options given to new hires a little more attractive, because there’s a perception that there’s a lot more room to grow. Salesforce puts it like so in the filing:

“The trading price of our common stock has risen significantly over the past several years. The Board regularly evaluates the effect of the trading price of our common stock on the liquidity and marketability of our common stock and believes the considerable price appreciation has made our common stock less affordable and, therefore, attractive to fewer investors. The Board believes that this considerable price appreciation, and the associated reduction in number of shares of stock covered by equity awards we issue to newly hired and existing employees, has reduced the perceived attractiveness of our employee equity awards.”

SAP shares fell more than 4 percent as the company reported revenue came in at €5.02 billion ($6.7 billion), constituting an increase of about 9 percent year-on-year. Operating profits were €1.59 billion. Since the results were preliminary, the company didn’t report net profits. That disclosure will come on Jan 23.

The sales results missed the mark that analysts had been expecting: Sales of €5.13 billion and an operating profit of €1.95 billion.

The new HANA product that was the focus of the big launch last week moves business data into memory chips and off spinning hard drives, thus making access to that data more immediate. The company has been working on a transition from its existing suite of on-premise software applications for businesses for several years and announced the completion of the process last week. And while sales of HANA were stronger than expected at €194 million, they still make up a relatively small slice of SAP’s overall revenue pie.

Also, last week co-CEO Jim Hagemann Snabe said without elaborating that the company’s medium-term guidance will be revised upward. Currently the company expects to report annual sales of €20 billion by 2015.

SAP competes closely with software giant Oracle as well as with certain cloud-based software companies including Netsuite, Salesforce.com and Workday.

Next up are some veteran sales leaders. Sales is an interesting topic at Dropbox, which has been masterful at viral freemium growth but would also like to have more of an enterprise presence.

Kim Malone Scott, who spent the past couple years at Apple after a long stint at Google where she was apparently unofficially known as the “High Priestess of the Long Tail,” has joined Dropbox’s support and online sales teams.

Scott had run online sales and operations for AdSense, YouTube and DoubleClick. She popped up on AllThingsD over the years for her work on publisher relations and video syndication. More recently, she was a “member of the faculty at Apple University,” which meant that she developed curriculum on company culture and taught a course on management.

Meanwhile, Kevin Egan spent the past 10 years in sales at Salesforce, where he started and built sales teams. He was most recently in charge of global recruiting. Egan will join the Dropbox sales team in January.

Dropbox now has more than 250 employees, with the vast majority of them hired in the past year. It has just announced plans for its first non-San Francisco office, to be located in Dublin, Ireland. But the company is attempting to keep its culture intact as it grows. Last time I visited headquarters, the entire team had vacated what I thought was the main part of their office, and moved together to the other side of the building, which I was told was because it was a better space to have the current-sized headcount in one place.

The marketing software concern for which the software giant will pay $871 million might have also made a logical fit at Salesforce.com, though Salesforce might have had to take on some debt to pay that price.

Anyway, there’s speculation that today’s deal for Eloqua may amount to a starting gun for a new round of acquisitions in the cloud software space. In a note to clients today, Karl Keirstead, an analyst with BMO Capital Markets, argues that Salesforce may answer Oracle with some acquisitions of its own.

“In our view, the deal is a modest net negative for Salesforce.com, making it incrementally tougher for them to pick off Oracle’s Siebel client base,” Keirstead wrote this morning. He also believes that about 50 percent or more of Eloqua’s customers are also Salesforce.com customers.

That might spur Salesforce into action on the acquisition front, he says. Having already made significant acquisitions of Radian6 and Buddy Media in the last two years, Salesforce might move on two privately held cloud-based companies in the marketing field.

One is Marketo, a fast-moving company that specializes in revenue performance management. It raised $50 million in a Series F round led by Battery Ventures last year, bringing its total capital raised to $108 million. Its other investors include Institutional Venture Partners, InterWest Partners, Mayfield Fund and Storm Ventures.

Another possible target for Salesforce, Keirstead argues, is HubSpot, a social media marketing outfit based in Cambridge, Mass. It raised $35 million in a fifth round of funding last month. The round brought its total capital raised to about $101 million, and Salesforce had invested in earlier rounds. Its other investors include Google Ventures, Sequoia Capital, General Catalyst Partners, Matrix Partners, Altimeter Capital and Cross Creek Capital.

The point, Keirstead says, is that Salesforce will seek to build its own “marketing cloud” offering. Of course, Salesforce doesn’t have the financial flexibility that Oracle does. It has only $1.4 billion in combined cash and short- and long-term investments as of the close of its most recent quarter. That’s almost pocket change compared to Oracle’s $34 billion as of the quarter reported earlier this week.

Marc Benioff, who is famous for declaring that “Software Is Dead,” may face a similar fate with his recent bets on Buddy Media and Radian6. These applications provide data to people who must then analyze, prioritize and act — often at a pace much slower than the digital world. Data, content and platform insights are too massive for mere mortals to handle without costing a fortune. Solutions that leverage big data are poised to win — freeing up people to do the strategy and content creation that is best done by humans, not machines.

Big data is too big for humans to work with, at least in the all-important analytical construct of responding to opportunities in real time — formulating efficient and timely responses to opportunities generated from your marketing cloud, or pursuing the never-ending quest for perfecting search engine optimization (SEO) and search engine marketing (SEM). The volume, velocity and veracity of raw, unstructured data is overwhelming. Big data pioneers such as Facebook and eBay have moved to massive Hadoop clusters to process their petabytes of information.

In recent years, we’ve gone from analyzing megabytes of data to working with gigabytes, and then terabytes, and then petabytes and exabytes, and beyond. Two years ago, James Rogers, writing in The Street, wrote: “It’s estimated that 1 Petabyte is equal to 20 million four-door filing cabinets full of text.” We’ve become jaded to seeing such figures. But 20 million filing cabinets? If those filing cabinets were a standard 15 inches wide, you could line them up, side by side, all the way from Seattle to New York — and back again. One would need a lot of coffee to peruse so much information, one cabinet at a time. And, a lot of marketing staff.

Of course, we have computers that do the perusing for us, but as big data gets bigger, and as analysts, marketers and others seek to do more with the massive intelligence that can be pulled from big data, we risk running into a human bottleneck. Just how much can one person — or a cubicle farm of persons — accomplish in a timely manner from the dashboard of their marketing cloud? While marketing clouds do a fine job of gathering data, it still comes down to expecting analysts and marketers to interpret and act on it — often with data that has gone out of date by the time they work with it.

Hence, big data solutions leveraging machine learning, language models and prediction, in the form of self-learning solutions that go from using algorithms for harvesting information from big data, to using algorithms to initiate actions based on the data.

Yes, this may sound a bit frightful: Removing the human from the loop. Marketers indeed need to automate some decision-making. But the human touch will still be there, doing what only people can do — creating great content that evokes emotions from consumers — and then monitoring and fine-tuning the overall performance of a system designed to take actions on the basis of big data.

This isn’t a radical idea. Programmed trading algorithms already drive significant activity across stock markets. And, of course, Amazon, eBay and Facebook have become generators of — and consummate users of — big data. Others are jumping on the bandwagon as well. RocketFuel uses big data about consumers, sites, ads and prior ad performance to optimize display advertising. Turn.com uses big data from consumer Web behavior, on-site behaviors and publisher content to create, optimize and buy advertising across the Web for display advertisers.

The big data revolution is just beginning as it moves beyond analytics. If we were building CRM again, we wouldn’t just track sales-force productivity; we’d recommend how you’re doing versus your competitors based on data across the industry. If we were building marketing automation software, we wouldn’t just capture and nurture leads generated by our clients, we’d find and attract more leads for them from across the Web. If we were building a financial application, it wouldn’t just track the financials of your company, it would compare them to public filings in your category so you could benchmark yourself and act on best practices.

Benioff is correct that there’s an undeniable trend that most marketing budgets today are betting more on social and mobile. The ability to manage social, mobile and Web analysis for better marketing has quickly become a real focus — and a big data marketing cloud is needed to do it. However, the real value and ROI comes from the ability to turn big data analysis into action, automatically. There’s clearly big value in big data, but it’s not cost-effective for any company to interpret and act on it before the trend changes or is over. Some reports find that 70 percent of marketers are concerned with making sense of the data and more than 91 percent are concerned with extracting marketing ROI from it. Incorporating big data technologies that create action means that your organization’s marketing can get smarter even while you sleep.

Raj De Datta founded BloomReach with 10 years of enterprise and entrepreneurial experience behind him. Most recently, he was an Entrepreneur-In-Residence at Mohr-Davidow Ventures. Previously, he was a Director of Product Marketing at Cisco. Raj also worked in technology investment banking at Lazard Freres. He holds a BSE in Electrical Engineering from Princeton and an MBA from Harvard Business School.

“Everything that can be invented has been invented.”
—Charles H. Duell, Commissioner, U.S. patent office, 1899

Last month, we gathered 75 of the top CIOs from around the country to discuss the new generation of enterprise software and the redefined role of the CIO. These CIOs are dealing with an unprecedented level of experimentation and innovative new approaches focused on unsolved problems in enterprise software. The end result will be a complete remaking of the entire enterprise software stack at the intersection of cloud, mobile and SaaS.

All of the CIOs are also facing a changed environment, one where every department within an organization makes its own software buying decisions, outside the purview of the CIO. This “departmentalization of applications” — from Box for collaboration to GitHub for software development to Tidemark for Enterprise Performance Management — means the CIO not only needs to figure out how to enable the department and employee to leverage these software products, but also meet the security and compliance requirements of the larger corporate environment — which, by the way, Bromium and Okta allow you to do. These CIOs know that they can adapt or organizations will adapt without them.

Their jobs weren’t always so difficult. For those of you old enough to remember, there was a time when enterprise computing was almost exclusively dominated by Microsoft, Oracle and Cisco. It was a time when on-premise, Windows-based applications were the de facto standard and there was no alternative. The enterprise was so entrenched that challenging the status quo was viewed as suicidal and very stupid. So hardened was the thinking that most innovation in the enterprise was relegated to mere feature extensions of existing solutions.

Fast-forward to today and the world of enterprise computing has done a 180. Traditional IT is being blown to bits as cloud infrastructure, Software-as-a-Service and mobile computing become the new standards. We are experiencing innovation and usage as never seen before. It is truly a renaissance of massive scale. Hundreds of billions of dollars are up for grabs as buyers shift to new architectures and away from old, as new users and new markets embrace the availability and ease by which they can consume technology.

On the Road to a Revolution

VMware and Salesforce catalyzed this movement from unlikely origins. Both were little known and under-funded, but against all conventional wisdom each visualized a new world order — a world in which the data center was virtual and where applications would run off-premise, eliminating op-ex and painful software upgrades. The world watched but there were few believers. “Suicidal,” people said. “Why would I ever permit my precious customer data to reside outside my firewall?”

But momentum grew. VMware figured out how to effectively break apart the functionality of software from the hardware it resides on, driving a new set of economics into data centers. Salesforce began expanding beyond CRM, demonstrating the wider viability of subscription-based payments and the customer benefits of constant iteration. Customers began to believe that this new vision might actually come true. From a single virtual server and a single customer relationship app, both companies paved the way for a new world order.

Every part of the business software stack is now being remade — from infrastructure to applications to mobile to analytics — with every incumbent in danger of having its core business eroded. And, sure, incumbents will try to buy innovative products and will try to develop their own competing technologies, but the reality is that this new paradigm disrupts the entirety of these businesses. Overcoming a foundational shift cannot be met by a simple product buy or even a strategy change — the new breed of enterprise software start-ups has different revenue recognition policies, different sales models and different go-to-market models, and engineering processes than incumbents. We are talking about transformations occurring here simultaneously in technology and business models! It’s an entirely new approach to IT.

The Departmentalization of Applications

Buyers are clamoring for this new approach. None of our portfolio companies use Oracle. Some use Microsoft, but the majority opt for Google or an open source package. In our own Executive Briefing Center, where we connect and facilitate exchange amongst global brands and the rising stars in tech, we’re finding that even enterprise CIOs are looking beyond mature players to new and emerging technology companies, especially in areas like cloud computing, mobile, big data and SaaS. These are the early indicators of a more permanent shift in IT consumption habits. This shift is resulting in software applications that are targeted for specific business functions. Apptio, for example, has built a world-class application that specifically targets the CIO as a customer. Mixpanel has an application that is in the big data space, but specifically targets analytics for mobile applications. This shift is what I am calling the “departmentalization of applications”.

And entrepreneurs know that incumbents are vulnerable. We see a tremendous number of entrepreneurs bringing a new approach to this crusty old enterprise software market. We see entrepreneurs like Ben Werther of Platfora, who is passionate about up-ending the Business Intelligence market, and Ash Ashutosh of Actifio, who is creating the next generation storage software.

These are entrepreneurs who choose to do the hard work of building software for companies to use, and the software they are creating is elegant, fast, does what it’s supposed to and priced fairly. This is an unbeatable value proposition. For everyone except perhaps the incumbents, this is a great time to be involved with enterprise software.

Peter Levine is a partner at Andreessen Horowitz and blogs at http://peter.a16z.com/. He has been a lecturer at both MIT and Stanford business schools and was the former CEO of XenSource, which was acquired by Citrix in 2007. Prior to XenSource, Peter was EVP of Strategic and Platform Operations at Veritas Software, where he helped grow the organization from no revenue to more than $1.5 billion, and from 20 employees to over 6,000.

Founders Dave Duffield and Aneel Bhusri have been around long enough to know that this is simply a beginning, and they also know that as much as investors love subscription businesses, Wall Street has a fundamental misunderstanding of how to accurately value them.

In the last few years, a new business model has taken hold — it’s happening in music (Spotify), transportation (Zipcar), consumer goods (Shoedazzle), and, of course, in the software industry with the dominance of the cloud as the preferred model for consuming applications. But even while the Subscription Economy has taken hold across multiple, multi-billion dollar industries, investors, analysts and investor media continue to miss the fundamental differences between product and subscription companies that make their financial measurements just as different.

• Subscription businesses are about building and monetizing recurring customer relationships, not about building and shipping units for discrete one-time transactions.
• Subscription businesses are forward-looking, not backward-looking. The health of the business is in what it is likely to make this year, the next year and the next, not what it has shipped, earned and spent in the past period.
• Subscription companies operate on recurring revenue and recurring expenses and therefore care about recurring profit, not operating profit.

Just think about it. We all know that if Bob is willing to give you $100, while John is willing to give you $100 a year for the next eight years, John’s offer is much more valuable. In the same sense, subscription businesses should be a more attractive investment than traditional one-time sales models. With a subscription revenue model, each year you start off with a known revenue level, versus having to chase every dollar of revenue, each year, from ground zero. Whereas in the traditional model, you invest in R&D, cost of goods, and sales & marketing with the hope of generating future revenue, in the subscription model, revenue from customers you have already acquired can be used to fuel future growth.

Regardless, most investors and analysts still look at EPS and P/E ratios when evaluating subscription companies, even though they are essentially worthless metrics in the Subscription Economy. Take this commentary from Morningstar’s Rick Sumner around Workday’s IPO:

Workday is now among the most richly valued of recent cloud computing IPOs, with a valuation of 22 times trailing sales in the last twelve months. IT software company ServiceNow, which went public in June, was valued at roughly 14 times during the time of its IPO, while e-commerce platform provider Demandware was valued at 17 times. “Workday can grow when it’s smaller, but the question becomes when they get in excess of a billion in revenue, can they still bolt on this high growth rate to justify its valuation?”

I know what Dave and Aneel are in for. Take my experience at Salesforce.com — arguably the first company to popularize a publicly-traded subscription business. I started as employee No. 11, and was part of the executive team through the IPO in 2004 until I left to start Zuora in 2008. During that time, we spent a lot of time and energy educating Wall Street investors and analysts on the vast differences in SaaS company performance from a traditional software company. Many remained fixed on the P/E ratio, and could not fathom investing in a company trading — at that point — 200X future earnings. Inside Salesforce.com, we knew that operating profit was essentially meaningless to measuring our value. (Honestly, as an investor, I would ding a subscription business that brought operating profit to the bottom line, seeing it as a signal from the company that it is cutting Sales and Marketing spending because it can’t efficiently acquire new bookings.)

Fast forward eight years. SaaS as a category has overtaken traditional software because it is a fundamentally better business model for the customer and the vendor. Even Oracle and SAP are attempting to change their mix (spoiler alert: they will fail). Yet in eight years, Wall Street seems to have learned almost nothing. And with the Subscription Economy growing in communications, media, consumer services and more, you would expect that Wall Street analysts would finally have a better handle on the metrics that do matter.

For example, the most important financial statistic for valuing Salesforce.com is buried as a footnote on page 11 of its FY 2011 annual report — “Select off-balance sheet accounts” — $2.2 billion in unbilled deferred revenue. But that’s not a GAAP metric, so it’s not reported. You won’t see it on a balance sheet. You won’t read it in an earnings release. And you won’t hear a CFO talk about that on an earnings call.

Zuora often discusses the three metrics that matter when valuing any SaaS business. We believe that Annual Recurring Revenue (ARR) drives everything. A company’s Growth Efficiency Index (GEI – the sales and marketing expense needed to acquire new dollars of ARR), retention rate, and recurring profit margin (how much non-sales and marketing dollars are spent on servicing existing ARR) tell you far more than profits. But not a single one of these metrics is disclosed in GAAP financials. That’s a disservice to the companies, to analysts and to individual investors.

The other day, I saw that Salesforce.com’s P/E ratio had reached 666. Chat board posters were making half-joking calls for widespread selling with the sign of the beast at hand. But unless better metrics are made clear for investors, they may as well depend on the science of the Dark Ages for next quarter guidance. The Subscription Economy is here, and it is here to stay. It’s time that Wall Street finds a way to institute new measurements of subscription companies based on the financial statistics that actually reflect its health, value and future prospects.

Tien Tzuo is CEO of Zuora, a subscription-billing company based in Silicon Valley. Previously, he was the chief strategy officer and chief marketing officer at Salesforce.com.

Salesforce has fired “fewer than 100 people,” some at Radian6, some presumably at Buddy Media, and perhaps some elsewhere within the company, spokeswoman Jane Hynes told AllThingsD via email. Two units are being combined in order to create something that CEO Marc Benioff has called the Salesforce Marketing Cloud, and so it’s reasonable to suspect that there might be some overlap and duplication in jobs. Hynes’ full statement is below:

“With the combination of Radian6 and Buddy Media, the Salesforce Marketing Cloud is the undisputed leader in social marketing and the only suite that allows brands to unify social listening, engagement, advertising and measurement. With the integration of Radian6 and Buddy Media, the Salesforce Marketing Cloud is re-balancing its resources to support its growth, including moving from a hub to a distributed model for certain customer-facing roles, consolidating marketing, and dramatically increasing investments in R&D. Fewer than 100 people globally have been impacted.”

Salesforce closed the $745 million deal on Buddy Media in August. It disclosed in regulatory filings on Monday that Buddy Media had at the time of its acquisition been burning through its cash at a rate north of $42 million a year. On the other hand, Radian6, which before Buddy Media had been Salesforce’s marquee acquisition, had the advantage of having been cash-flow positive at the time of its $325 million acquisition by Salesforce in March of 2011.

News of the firings was first reported by TechVibes. The Canadian tech news site said Radian6’s marketing and social community departments have been “decimated.”

Asa Mathat / AllThingsD.com

In the TV interview (see it below), Ellison made news, saying that Oracle will not be doing any large acquisitions, especially NetApp, the storage concern that has been occasionally mentioned as a possible target. Ellison said there would be no large acquisitions.

“We think we have all the assets in-house to grow very rapidly on an organic basis,” he said.

Baritoromo had clearly been reading AllThingsD because she made a point to call out Ellison’s 45 percent share of NetSuite. In a subtle dig at Salesforce.com and its CEO Marc Benioff, Ellison has been calling Oracle “the first cloud computing company.”

Then it was on to his keynote — his second of the conference — where he revisited in additional detail some of the points he made in his first keynote from Sunday, but also did some demos.

For one thing, Ellison reminded the audience that while Oracle may not yet be the biggest software-as-a-service company by revenue, it does offer more applications on a SAAS basis than anyone else — which, given Oracle’s just-completed rewrite of its entire suite of applications for the cloud, is a factual claim.

But he also made some important pronouncements around his view of how the cloud runs, again making subtle digs at the competition. “When you run in the cloud, you also pick the infrastructure that it runs on,” he said. That’s a dig at Salesforce and other smaller SAAS companies that seek to compete in some manner or another with Oracle. Sign on for the application, you’re stuck with the platform and other infrastructure that the company selling it has running in their data center.

It was an easy segue from there to Oracle’s public and private cloud offerings. Ellison said Oracle has about 400 customers using its new Fusion applications. He said about two thirds of those customers were running their applications in Oracle’s public cloud, while about one third were doings so on dedicated machines on premise.

But since both the public and private cloud are essentially equivalent — after all, they run on the same hardware and the same software — it’s easy for a company to change its mind. “They can move to an Oracle private cloud or public cloud without changing anything,” he said. “It’s very easy to move applications back and forth.” He thinks many of those customers will do just that and switch over to the public cloud within a year. “We’ll have more visibility into that by this time next year,” he said.

Part one of Ellison’s CNBC interview is below. The other parts, where he talks about increasing Oracle’s dividend, explains why the hardware business shrank, why he bought all those houses, calls his late friend Steve Jobs irreplaceable, and then kidded Baritoromo about buying the LA Lakers are also all online.

Chatterbox: This is the offering that Benioff telegraphed last week, and which raised so many eyebrows. Salesforce calls it the “Dropbox for the Enterprise,” laying aside the fact that one called Box already exists. Anyway, the point is to “manage and share files in the context of business,” as the press release says. Once you get employees collaborating via social tools, they’re going to want to share files they can work on together within that context. Box, in which Salesforce is an investor, is one target, as is Dropbox. But so is Microsoft’s SharePoint.

Salesforce Identity: Once you get into the business of integrating a bunch of cloud services into one place, you need to manage all the sign-on credentials involved. This is the reason that the start-up Okta exists. Salesforce is essentially aiming to compete with Okta.

Work.com: Remember when cloud-based human resource and talent-management software companies were being acquired at a rapid pace, in part because of the rise of Workday? Salesforce got into the act, too, by acquiring a tiny HR cloud player called Rypple. Work.com is its new name.

Salesforce Touch: One of the earliest companies to see the potential for Apple’s iPad as a tool for use in the enterprise was Salesforce.com. It had early versions of its core customer-relationship management applications in the App Store, and has since expanded its reach to Android and other platforms. Today, it’s kicking that commitment to mobile up a notch. Salesforce Touch uses HTML5, allowing it to work easily on iOS and Android tablets and phones; it is optimized for touch interface. The point is to make Salesforce easy to get at when on the go — and sales people always are on the go — so they can take advantage of just a few minutes of downtime and get things done from a mobile device.

Chatter Communities for Partners: There are a lot of reasons why a company might want to build a social community. The classic example I can think of is a videogame company that wants to support people working their way through the levels of a tough game. But you might want to set up a social network of vendors you buy from, or distributors who resell your products, or third parties who support what you sell. The idea is to make creating that community easy and full-featured from the start, so there’s not so much expense and effort involved. It’s built on Chatter, which is Salesforce’s enterprise social and collaboration platform.

Data.com Social Key: It’s one thing to ask a sales lead what he thinks about something, but quite another to keep track of what he or she tweets or blogs about on that same topic, and often it can yield some insight to help close a deal. Up to now, Data.com has been Salesforce’s go-to offering for background intelligence on sales leads, combining things like Dun & Bradstreet profiles with contact information from Jigsaw. Social Key brings information gleaned from Twitter and blogs and YouTube videos into the mix.

Salesforce Marketing Cloud: Salesforce’s two biggest acquisitions in recent memory are Buddy Media and Radian6. With the Marketing Cloud, Salesforce aims to combine the strengths of the two, to draw together disparate strings of conversations with customers via Facebook, Twitter, LinkedIn and online communities. It also helps create and manage marketing campaigns within those communities, and helps to track the results of those efforts.

Heroku Enterprise for Java: Oracle’s Java is the most widely used programming language in use in the Enterprise. Today, Heroku, the cloud-based software-development service that Salesforce acquired in 2010 , is for the first time embracing the community of Java developers. Getting a Java app built means assembling a bunch of different tools piecemeal from different sources. The new Java service gets software developers fully ready to get right to work with a single click, which saves a lot of time and effort, and thus reduces the cost of development. One other feature sure to be popular with the developers is integration with Atlassian, a collaboration tool that is geared toward the needs of programmers.

It’s worth nothing that Salesforce shares have been trading up considerably in the last month or so, in part because of the anticipation of Dreamforce, but also on Salesforce’s strong results. Today, the shares are up by $1.09, to $157.38, which amounts to a 61 percent increase this year to date. Say what you will about the Salesforce Kool-Aid, its shareholders like the taste.

There’s another drama playing out ahead of Benioff’s keynote, concerning what he may or may not say about a series of features and services called Chatterbox that Salesforce is launching. Last week, Benioff surprised a lot of people by declaring at the TechCrunch Disrupt conference that he was gearing up to launch services that would compete with Box, the enterprise cloud file-sharing and collaboration service, and also with Okta, a cloud identity-management service.

Aaron Levie, Box’s CEO, said he had seen the service coming for a few months now, and that it was, in a sense, inevitable. Salesforce’s Chatter social enterprise service would in time need a robust file-sharing capability built into it, anyway.

Since then, I’ve checked in with Todd McKinnon, CEO of Okta. His reaction was pretty close to that of Levie’s. He has known that it was coming for awhile, and Salesforce had to do it anyway. “Salesforce is realizing that, with the cloud and a mobile work force, managing the identity layer is a key part of it,” McKinnon told me Monday. “They finally woke up to it. It’s a little unnerving when someone as big as Salesforce gets into your space, but it makes it clear to our customers and partners that this is a big deal we’re working on, so in that sense, it’s a big validation.”

With so many companies adopting cloud services and creating accounts for employees on all of them, McKinnon left Salesforce, where he had headed up its engineering efforts, to start Okta. The service gathers up all those cloud account credentials and passwords and creates a single sign-on for all of them, making them easy to manage. Salesforce.com is one of the 1,351 services it works with. Others include Box, Google Apps, NetSuite, Workday and Microsoft’s Windows Azure.

McKinnon takes some encouragement from the data he sees courtesy of his own service. Offering a service for unified sign-ons makes Okta sort of a barometer for the cloud ecosystem, he says. Chatter, Salesforce’s social service, is more or less central to Salesforce’s efforts to unify its many offerings, and is the company’s answer to services like Jive and Yammer that have sought to make the process of collaborating within a company a little more akin to using Facebook.

Salesforce’s promotion of Chatter helped Jive and Yammer seem more legitimate. “Salesforce put all this money and effort behind Chatter, but it didn’t kill Yammer or Jive, it only accelerated their business,” McKinnon said. Jive IPO’d last year, and Yammer was acquired by Microsoft for $1.2 billion over the summer. “Once Salesforce comes out with its identity management product, I think more people will look at us.”

So, how much of a competitive threat does McKinnon see from Salesforce? Some, but announcements aren’t products. And there’s the rub. Salesforce, McKinnon says, has a habit of making big announcements from the stage at Dreamforce, and then not following up, or at least not following up to the extent that the pronouncements from the keynote stage would seem to imply. “Salesforce is in many ways a marketing-driven company,” he says. “We’ll have to see how they execute. The real proof will be in how they follow up this Dreamforce announcement.”