Ballmer Vs. Benioff? I Can Hardly Wait!Ballmer Vs. Benioff? I Can Hardly Wait!

For once, Microsoft may be picking the wrong battle, but brother, would I pay to see Steve Ballmer and Marc Benioff in the ring. A long line of opponents lay in the wake of Redmond--Netscape, Sun, the U.S. Department of Justice--but when Ballmer said Thursday that Microsoft would give Benioff's software-as-a-service juggernaut, Salesforce.com, "a run for its money," he may have invited more than he bargained for.Let's face it--in terms of sheer size and financial resources, it's no contest. Salesforce could spend all its available cash a thousand times over and barely make a dent in Microsoft's war chest. But size and riches aren't the issue here--market innovation is. Not to mention that Benioff--whose physical stature rivals Ballmer's--is the kind of renegade CEO who thrives on taking on the big boys. In a few short years of championing the market for on-demand customer-relationship-management software, he's played a major role in turning one-time CRM darling Siebel Systems into a struggling shadow of its former self. Think of it: A company that at its peak raked in $2 billion a year in revenue now puts out press releases proclaiming that it won a 50-seat subscription over an upstart rival that has yet to have an $80 million quarter. It's the software equivalent of the New York Yankees boasting that they'd stolen a third-string catcher from the Tampa Bay Devil Rays.

So if Benioff has had that kind of impact on Siebel, what's to prevent him from thinking he can't fend off a competitive threat from Microsoft? Consider the facts. Salesforce has essentially pioneered the market for on-demand CRM and is quickly developing a platform for building and running all sorts of on-demand applications. It's built a huge roster of customers who show up in large numbers at all of the company's numerous press events, eager to remind journalists--and Benioff--how much they love Salesforce's service. These are small and midsize companies that felt forgotten by the big software vendors, locked out of a playing field that's too expensive and too complex for them, and which, to be honest, they weren't all that welcome to join until the vendors started running out of big companies to sell to.

Conversely, Microsoft has been somewhat of an afterthought in the CRM market. No one--not customers, not analysts, not even competitors--would describe its CRM offerings as a serious threat to the market, and how often has anyone been able to say that? In fact, Microsoft's whole enterprise-application strategy has been stuck in neutral for years, and despite the best-laid plans, it's not likely to pose a real threat to Salesforce without forking over big money to buy its way into the market. The most likely scenario would have Microsoft buying one of Salesforce's rivals--companies like RightNow Technologies, NetSuite, SalesNet, or the open-source SugarCRM. But the on-demand world has been a defiant, almost revolutionary one, and my bet is that any of those companies would rather seek a merger with Salesforce than become part of the Microsoft machinery.

Another possibility would be for Microsoft to buy Siebel--a move that would bring it a huge CRM customer base and would seem to fit with its plans to concurrently offer its on-premises CRM app along with its planned on-demand product. But given the track record, would the addition of Siebel's technology make Microsoft more of a threat in Benioff's eyes? Not likely.

Naturally, the wildcard here is Benioff himself. This is not a man who backs down from a fight, and he's not intimidated by largeness. This is a brash, outspoken CEO who came from the intense environment at Oracle, where he worked closely with Larry Ellison, one of the most intimidating figures in the software industry, and emerged not only unscathed, but stronger. And even though Ellison himself has poured a small boatload of his own cash into NetSuite, that company, while a success in its own right, hasn't exactly impeded Salesforce's progress.

No, when all's said and done, it says here that Salesforce will still be standing. It's got the focused vision, devoted clientele, hard-charging product development road map, and, perhaps most importantly, charismatic and fearless CEO needed to fend off the threat from Redmond. That is, unless Microsoft throws its weight into the most unlikely--but juiciest--of scenarios: a hostile takeover bid for Salesforce. Who wouldn't love to see THAT struggle unfold?

Regardless of the path Microsoft chooses, for proof that Salesforce is prepared to fight until the bitter end, look no further than the statement Benioff released in response to Ballmer's comments. It stands on its own: "Microsoft's failed enterprise software strategy has let the industry down," Benioff said. "Customers are tired of waiting for Microsoft to innovate." Those, dear readers, are not the words of someone who's ready to cash in or quit. They're the words of a scrappy opponent, one Microsoft may wish it had never taken on.