A lot of interesting things have been happening between Microsoft and Salesforce in the last few years. The software giants have been tying up numerous partnerships with each other. However, the recent goodwill may be coming to an end. According to researcher Synergy Research Group, Microsoft has overtaken Salesforce as the number one Software as a Service (SaaS) provider.
The firm researched market share over the second quarter of 2016. The results show that Microsoft took a 15% market share, compared to Salesforce's 14%. During the first quarter of the year, the companies were tied on 14% each.
Of course, Microsoft small margin of victory this quarter could easily swing to Salesforce in future periods. It is clear that both are the runaway Software as a Service providers in the market. Breaking down sectors of the market, it is evident that Microsoft and Salesforce are locked in a battle.
For example, Salesforce retains its lead in terms of customer relationship management (CRM). However, Microsoft managed to be the number one provider in collaboration tools. Also, Redmond's recent purchase of LinkedIn should position the company to challenge Salesforce in the CRM sector.
Microsoft managed to score well in other areas, such as second place in CRM and this Collaboration and Enterprise apps. Overall, Microsoft moved into first place in the market as the second fastest growing SaaS provider. Oracle was the fastest growing, compared to competitors like IBM, Cisco, SAP, Adobe, and more.
Microsoft and Salesforce
Microsoft and Salesforce have been rivals for years. At one point the rivalry was tense, but that has changed in recent years. The companies have collaborated on various projects. Salesforce adopted Microsoft's services for its own software. For example, the SalesForce1 Windows 10 app supports Continuum and the company also adopted Outlook for its email management.
The strong partnership has shown some cracks in recent months. Microsoft and Salesforce entered a bidding war for LinkedIn, which Microsoft won to the tune of $28 billion. It is unclear how that bidding war affected the relationship between Microsoft and Salesforce. Certainly, the door has been opened to Microsoft. The company taking the top spot in the SaaS market will not sit well with Salesforce.
SaaS Market in Good Health
There is definitely a good reason for both Microsoft and Salesforce to push for top spot in SaaS. The market is booming according to Synergy Research. The company points out that the sector has grown 33% year on year and brought in $11 billion in second-quarter revenue. Chief Analyst and Research Director John Dinsdale says the SaaS market will triple in five years.
“In SaaS, a big battle is playing out between the traditional broad-based software vendors and companies that are focused on a specific application area or industry sector, many of which are entirely cloud-based,” Dinsdale said.
“It might be tempting to assume that the latter camp are leading the charge, but in fact the traditional software vendors are growing their SaaS revenues more rapidly, helped by their huge base of on premise software customers that can be aggressively targeted for conversion to a SaaS consumption model.”