Yesterday, Salesforce.com announced that it had completed its acquisition of web conferencing vendor DimDim for $31 million in cash (net of cash acquired). The company intends to build DimDim’s feature set into its Chatter product (prioritising presence, instant messaging/chat and screensharing, it would seem), helping to build out its collaboration software credentials and, in Salesforce.com CFO Graham Smith’s words, “create more reasons for customers to live inside of Salesforce.com”.
As a relative new entrant to the enterprise collaboration market (Chatter was first announced in November 2009), Salesforce has made reasonable progress within its own customer base but, as yet, has not quite managed to gain acceptance in the broader market, either from a market profile perspective or from a new customers perspective—but it is still early days. To do this it needs more than a microblogging platform, and this is what the DimDim acquisition is intended to achieve. Of course, the other thing it is missing is experience of the collaboration market, and that can only come with time. While it is acquiring good engineers with DimDim (DimDim has around 75 people in total, based in India and Massachusetts), the startup has not had a great deal of experience of enterprise collaboration on any kind of scale, so is unlikely to bring much value from this perspective.
Not surprisingly, given its platform approach to applications, Salesforce.com is not continuing to sell DimDim as a standalone service, and so DimDim’s existing 6 million users will need to look elsewhere. The service will operate until 15th March, after which it will be switched off—including access to audio recordings, so customers are advised to download any materials before that time. There is also a question as to what this means for DimDim’s recent partnership with Novell – Novell’s latest version of its Conferencing product (which was only released in May 2010) replaced its previous core with an OEM’d version of DimDim Pro. It is possible that Salesforce.com will continue to honour this partnership in the short term, but in the long term Novell will need to come up with an alternative partnership, or rebuild its own technology using what it’s learnt from DimDim. Either way, I can’t help but think that Novell should have just bought DimDim in the first place instead of partnering—although given its own acquisition predicament, presumably this wasn’t an option.
Overall, the acquisition makes sense for Salesforce.com in the context of its long term strategy for collaboration and Chatter, and I wouldn’t be surprised to see it make other small acquisitions in the collaboration space over the next 12 months or so to further flesh out the platform. Yes, it was late to market with Chatter but you can’t question that the company has the resources to catch up fast.
Collaboration advisory service customers can read our Vendor Insight report Salesforce.com spreads its wings with Chatter here.
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