All Things Digital

Salesforce.com will be acquired in 2007. We believe the growing importance of online delivery of software and business services will make Salesforce.com (and particularly its AppExchange hub) a very tempting target to both large players (like IBM, SAP, Oracle, Microsoft) still struggling to scale down and move online, and consumer-heavy players (like Google, Yahoo, AOL) trying to ’scale up’ to the business market as a way to further monetize their online presence.”

–IDC Predictions 2007

Salesforce.com CEO Marc Benioff (photo, right) wasn’t kidding when he said in May of 2007, “We’re the Google of business.” The customer-relationship software pioneer this morning announced an alliance with Google (GOOG) that will see it integrating Google’s online services into the Salesforce.com (CRM) platform.

Christened Salesforce for Google Apps, the offering embeds Gmail, Google Calendar, Google Talk and Google Docs directly into Salesforce.com’s core sales force automation, marketing and customer-service applications.

The partnership is quite an endorsement of business-workspace applications delivered from the cloud. It’s also an aggressive move against Microsoft’s (MSFT) Dynamics Live CRM, Redmond’s customer relationship management software, which is integrated with its Office suite.

Together Google and Salesforce.com are clearly seeking to challenge Microsoft’s multibillion-dollar Office franchise. As Marc Benioff, CEO of Salesforce.com, told the New York Times, “The enemy of my enemy is my friend, so that makes Google my best friend.” And perhaps even a potential acquirer.

Oracle’s Larry Ellison was given a bit of a respite from the financial beating he’s taken over the past few days by the empathic folks at the San Mateo (Calif.) County assessor’s office. The Oracle (ORCL) chairman, worth $25 billion according to Forbes, recently had the value of “Sanbashi,” his grandiose 23-acre Imperial Palace in Woodside, Calif., reassessed from $173 million to about $70 million.

Why the sudden decline in value? Well, like all 16th-century Shogun estates with authentic Japanese teahouses and strolling gardens it suffers from–in the words of Ellison’s appeal–”significant functional obsolescence.” And that obsolescence is so significant that it entitles the world’s 14th wealthiest man to a $3 million tax refund.

Sadly for San Mateo County, that refund will be paid from property taxes that otherwise would have gone to schools, among other things. And what will Ellison do with the money? Who knows. Perhaps he’ll spend it on another 30-ton “shower rock” like the one in Sanbashi, which he reportedly “auditioned” by pretending to shower in front of it.

Oracle CEO Larry Ellison is a little lighter in the wallet today–about $2 billion lighter–thanks to a third quarter sales miss that sent the company’s shares down some 8% in after-hours trading.

Oracle (ORCL) posted a 30% increase in profits and a 21% increase in revenue, both in line with expectations. But a 16% rise in sales of new software that came in on the low end of its January forecast spooked investors who believed Oracle to be immune to the economic slowdown.

“A lot of investors had bought the stock in anticipation of a strong quarter,” said Avian Securities analyst Jeff Gaggin. “The applications business was definitely disappointing.”

You wouldn’t know it from the company’s share price today, but VMware (NYSE: VMW), maker of virtualization software, reported a 150% increase in fourth-quarter profit and an 80% jump in sales to $412 million yesterday. Sadly, investors–presumably the same ones that slapped Apple around after its “best quarter ever”–took a pessimistic view of such growth (which admittedly fell shy of forecasts) and cut the company’s share price by almost 34%.

The stomach-curdling nosedive eradicated about $10 billion in shareholder wealth and dragged VMware’s parent company EMC into the mud as well. The company, which spun off VMware last summer and remains its largest stakeholder, saw its shares slip 6%, though it just reported a strong quarter itself.

Perhaps VMware, which has been lauded as one of the best tech offerings in recent history, is overvalued after all. The company is facing increased competition from powerful rivals. “If you miss your numbers in just your second quarter after going public, that suggests the stock was overhyped,” Trip Chowdhry, an analyst at Global Equities Research, told Reuters. “The story is not as perfect as investors believe. Oracle and Microsoft and Citrix have spoiled VMware’s party.”

Perhaps. But if it’s not, the sudden decline in VMW could present a nice investment opportunity. “Here’s your buy-in discount,” says the Motley Fool. “Enjoy it while you can. It took 10 weeks for VMware’s stock to go from a 52-week low of $51.50 per share to the high-water mark at $125.25. It can happen again, so don’t get caught flat-footed.”

Well, Microsoft is certainly in a generous mood these days, isn’t it. This morning the software giant said it has offered $1.2 billion for enterprise search outfit Fast Search & Transfer, a bid that represents a 42% premium over the company’s share price.

Why would Microsoft pay so much for a venture that’s expected to post a $130 million loss in 2007? “Enterprise search is becoming an indispensable tool to businesses of all sizes, helping people find, use and share critical business information quickly,” said Microsoft Business Division President Jeff Raikes. “Until now organizations have been forced to choose between powerful, high-end search technologies or more mainstream, infrastructure solutions. The combination of Microsoft and Fast gives customers a new choice: a single vendor with solutions that span the full range of customer needs.”

Which translates loosely as “Google.”

“Google maintains a strong presence in the market with its appliance-based offering, and in late 2006 IBM announced a partnership with Yahoo to offer Omnifind enterprise search capabilities to business customers,” said Technology Business Review analyst Allan Kran. “Furthermore, TBR believes the enterprise search market is a logical extension for a number of companies providing data management solutions, including EMC and Oracle. As the volumes of unstructured data within organizations continue to grow, TBR expects additional focus will be paid to improving the accuracy and efficiency of enterprise search tools.”

According to last year’s safely-looking-ahead-to-the-year-to-come lists, 2007 was to be “a year of hyperdisruption for the technology industry”; it was to be “a year of significant developments” and “a year of evolution”; it was to be “a year of invention and innovation,” “a year of experimentation” and “a year of slow, but significant, change”; it was to be “a year of carnage,” but it was also to be “a year of great happiness and multiple blessings.” Above all, 2007 was to be “a busy year for technology.”

Which, as you’ll see below (and in our companion video), is pretty much how it turned out. What follows is Digital Daily’s abridged guide to the year in tech news–a fond reminiscence of what was, and our First Annual Year-End List For Year-End List Haters.

1. Yahoo Shareholders Reject Plan to Tie Executive Compensation to Company’s Crappy Performance
   Well, what do you know: Yahoo’s annual shareholder meeting didn’t conclude with CEO Terry Semel’s head piked on the exclamation point of the Yahoo sign outside company headquarters.

2. I Know It Was You, Fredo. You Broke My Heart. You Broke My Heart!
   Apparently, Fred Anderson is the “Fredo” of the Apple options backdating family.

3. We’ve Asked John Williams to Do a Special Performance of the Theme From “The Poseidon Adventure” for Our Q4 Results
   Who’s programming Microsoft’s on-hold music, Apple’s Phil Schiller? Waiting for the company’s third-quarter earnings call to begin yesterday, those listening in were treated to an instrumental piano version of Celine Dion’s “My Heart Will Go On.” From “Titanic,” the disaster movie.

4. I’m Proud to Say Our New “Soylent Green” iPod Is Made of 100% Biodegradable Greenpeace Activists!
   If you’re going to try to smear Apple for reckless environmental practices, you best have some hard epidemiological and toxicological data on hand, because goofy Photoshop treatments of the company’s marketing materials just can’t stand up to a blow from the Apple PR machine.

5. And Online Display Impressions Soared as More Americans Checked Their AOL Accounts for Old Times’ Sake
   To hear tell from Time Warner executives, the company’s better-than-expected earnings for the first quarter owed quite a bit to gains in online-advertising market share by its AOL Internet division.

6. Web 2.0 Audience in Mirror May Be Smaller Than It Appears
   How ironic is it that Web 2.0–the “participatory Web”–has far fewer participants than its architects would have us believe?

7. And for My Next Trick, I’ll Turn Myself Into a Complete Jackass
   If you’re going to demand that YouTube remove a video to which you object under the Digital Millennium Copyright Act, it’s probably wise to make sure that you actually understand the DMCA.

8. War Is Peace. Freedom Is Slavery. Ignorance Is Strength. DRM Is DCE.
   You can’t put frosting on manure, but HBO’s Chief Technology Officer Bob Zitter isn’t above trying.

9. We’re Naming It the Motorola STNKR, After Our Q1 Earnings …
   Carl Icahn was right. Motorola really is desperate for a new product. How else to explain a patent the company was awarded last month for a “communication device having a scent-release feature and method thereof.”

10. The Frienemy of My Frienemy Is My Enemiend
    If Microsoft is planning an acquisition in the online marketing and advertising space, it better act fast, because if it waits much longer there won’t be anything left to acquire.

11. How Would Monsieur Ellison Like His BEA Served? Mixed in a Bucket With Oracle’s Other Acquisitions?
    Looks like we may be in for another PeopleSoft-esque takeover drama …

12. I’m Just Biding My Time Here Until I Can Quit and Study Whale Feces Full Time
    Given the chance, how would you alter the course of your career? Well, if you worked at Microsoft’s Security Response Center, you might consider taking a job as an Olympic drug tester, a gravity research subject, or a “whale-feces researcher.”

13. Much Like Energy, BS Cannot Be Created or Destroyed, It Can Only Be Changed From One Form to Another
    If Steorn’s perpetual motion effort is anything like its e-commerce venture (and by all accounts things do seem to be going that way), the only thing in its future is insolvency.

14. From Now On, We’ll Be Known as Nlsn/NtRtings
    Looks like vowels won’t be the only accoutrements to be tossed aside in the rise of Web 2.0. The venerable page view is to be abandoned as well.

15. The Defendant Stands Accused of Copyright Infringement, Breach of Contract and Misappropriation of Dumb Luck
    According to popular legend Facebook founder Mark Zuckerberg once kept two versions of his business card in his wallet–one with the title CEO, the other with “I’M CEO . . . BITCH.”

16. Well, Here Come YouTube’s Video ID Tools. Guess That Means Godot Will Be Here Any Minute Now
    Google’s apparently finished “educating users about copyright law” and has moved on to the far more important business of making sure not to run afoul of it.

17. Look at It This Way: Now That Yahoo’s an ‘Ecosystem,’ the EPA Can Finally Declare It a Superfund Site
    “Our financial performance is not what we would like to see long-term.” This, from Blake Jorgensen, Yahoo’s chief financial officer who, just six weeks into the job, is already well versed in the company’s fiscal truisms.

18. Gates to Google: My Lyrical Technique Will Leave Your Body Weak
    Much as Microsoft Chairman Bill Gates fancies himself untroubled by Google’s incursions into his software empire, they clearly do chafe him a bit.

19. Newest Yahoo Mail Feature: BCC Beijing
    Sure, Yahoo signed China’s “Public Pledge on Self-Discipline for the Chinese Internet Industry,” a voluntary agreement to monitor and restrict information deemed “harmful” by Beijing, but did it have to take it quite so seriously?

20. Apple: Wham, Bam, Thank You Fanboi
    “I feel like a $200 whore.” That was one iPhone early adopter’s crass assessment of his feelings of self-worth, after Apple unexpectedly cut the price of the device by a third–just two months after it arrived at market.

21. In the Unlikely Event of a Water Landing, Sergey’s California King May Be Used as a Flotation Device
    With its onboard hammocks, full-size sofas and California King beds, it’s a wonder Google’s “party plane” has room for scientific instrumentation befitting the National Aeronautics and Space Administration, but apparently it does.

22. Act Now and Get a Downgrade to the OS You Really Want, ABSOLUTELY FREE!
    It’s looking more and more like the pent-up demand for Windows Vista we’ve heard so much about this past year is really just pent-up demand for Windows XP.

23. Dude, I Work for Friggin Forbes Magazine. Have You Heard of It?
    The year-long guessing game is over. New York Times reporter Brad Stone has outed Daniel Lyons, a senior editor at Forbes magazine, as the author of the Secret Diary of Steve Jobs, the satirical blog lampooning Apple’s iconic CEO (See? Told you it wasn’t me).

24. If Facebook’s Worth $15 Billion, Then My Stupid Idea’s Got to Be Good for $10 Mil
    Apparently the vainglory from which Facebook CEO Mark Zuckerberg appears to suffer is communicable and spreading rapidly throughout the social network’s developer community.

25. A Billion Here, a Billion There, and Pretty Soon You’re Talking Real Bollocks
    MySpace is worth $65 billion in the same way that Facebook is worth $15 billion–hypothetically.

26. “Apple Has Destroyed the Music Business”–Not That We Didn’t Try Our Best
    Many, many years ago, when the digital-music business consisted of little else besides Napster and the Recording Industry Association of America’s lawsuits against it, Apple proved that there was indeed a decent business to be had in selling music online for $1 per song.

27. It’s Not an Unpaid Endorsement, It’s a “Social Ad”
    Facebook’s Social Ads aren’t endorsements, they’re a “representation” of user activity.

28. Obama Announces “No Tech Policy Left Behind” Plan
    If Google’s mission is to organize the world’s information and make it universally accessible and useful, then Democratic presidential candidate Barack Obama’s is to do the same to its tech-policy issues.

29. Sounds More Like the “Zune of Reading” to Me
    If Jeff Bezos truly hopes to create “the iPod of reading,” observers say he’s going to have to do a hell of a lot better than Amazon’s new Kindle e-book reader.

30. Fiascobook
    What Facebook CEO Mark Zuckerberg lacks in foresight, he certainly makes up for in disingenuous hair-shirt remorse.

Oracle CEO Larry Ellison’s had a hell of a week, hasn’t he? Yesterday, Oracle shrugged off concerns about a tech slowdown, besting Wall Street’s expectations with a 35% gain in its second-quarter earnings. And then today, shares of NetSuite, the “software as a service” venture of which he is a principal owner, priced at $26 a share in their IPO debut, well above the expected per-share price range of $19 to $22, which itself was $6 higher than $13 price initially set by underwriters.

NetSuite sold about 6.2 million shares in its modified Dutch auction IPO, raising$161.2 million. That makes the company worth more than $1.5 billion and the stake of its mercurial investor–who’s already No. 11 on Forbes list of billionaires–worth about $1 billion.

Turns out William Klein, BEA Systems’ vice-president of business planning and development, was sorely mistaken when he said “BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price” Oracle offered for it. Certainly, that’s the opinion of Oracle CEO Larry Ellison, who says any future Oracle takeover bid for BEA Systems–if there ever is one–will be for less than the $7 billion it offered last month.

“If we made another offer [for BEA], the price would be lower,” Ellison said at Oracle’s annual analyst meeting yesterday. “Clearly the $17 price seems too high today. It seems unlikely anyone will want to buy them now. … If their goal was to stay independent, I think they’re doing a good job.”

That said, Oracle’s BEA experience hasn’t exactly put Ellison off his feed. “We are now looking at our second favorite stocks and we have found some attractive” ones, he said.

“The business-intelligence space is undergoing massive changes. Oracle’s acquisition of Hyperion was the first domino to fall. SAP’s deal with Business Objects is the second one. Now the question is, which will be the next domino to fall,” Gartner VP Andreas Bitterer asked last month. Answer: Cognos.

In a year during which Hyperion was bought by Oracle, and Cartesis and ALG Software acquired by Business Objects, which is itself being purchased by SAP, Cognos was the last of the independent business-intelligence software vendors and a particularly attractive acquisition target (IDC estimates the market for business intelligence is worth about $6.3 billion in worldwide software revenue).

No surprise then to hear that IBM has made a $4.9 billion bid for Ottawa-based Cognos. Big Blue will pay $58 a share in cash for the company–a 9.5% premium over its Nov. 9 closing price–which it plans to fold into its Information Management Software division.

Steve Mills, head of IBM’s software group, insists the company’s bid isn’t a knee-jerk response to the recent flurry of acquisitions in the business-intelligence space. “We never do acquisitions on defensive moves or based on what others are doing,” he said.

But it’s tough to take him at his word when the premium IBM’s paying for Cognos suggests there may have been a bit of a bidding war for the company. “Cognos was the last large publicly traded BI player out there,” said Paradigm Capital analyst Gabriel Leung. “The space is growing well. It was a defensive play by IBM. They’d looked around at what Oracle and SAP were doing.”

Microsoft chairman Bill Gates, not Apple co-founder and CEO Steve Jobs, is the most influential IT personality of the past quarter-century.

This according to a survey of IT professionals conducted by the Computing Technology Industry Association. Asked to list the most influential tech personalities of the last 25 years, 84% of respondents listed Gates, and 73% listed Jobs. Also appearing on the list: Dell CEO Michael Dell (53% of respondents); Linux founder Linus Torvalds (47%); Google founders Sergey Brin and Larry Page (also 47%); Cisco CEO John Chambers (44%); Oracle CEO Larry Ellison (36%); Vint “Father of the Internet” Cerf (35%); Microsoft CEO Steve Ballmer (also 35%); and eBay CEO Meg Whitman (30%).

So much for Facebook’s vaunted “open platform.” Tomorrow, an alliance of companies led by Google will introduce a common set of standards that will do for any Web site that embraces them what the Facebook Platform did for, well, Facebook.

OpenSocial, as Google has named it, is a set of common APIs (application programming interfaces) that will enable developers to write applications for a broad range of Web sites and services without any individual customization. Think of it as Facebook CEO Mark Zuckerberg’s “social graph” but writ large.

And while some might smirk at OpenSocial’s initial roster of participants–LinkedIn, hi5, Ning, Friendster, Plaxo and Google’s own “big in Brazil” social network Orkut–it does include a few big names: business software makers Salesforce.com and Oracle. Oh, and Google. Which, as TechCrunch’s Erick Schonfeld points out, already has much of the critical mass it needs to push this effort forward: “Google already has so much data on you, depending on how many Google apps you already use. It just needs to bring everything together. … Over time, Google will connect all of these together in different ways, along with data about you from other social services across the Web, and give developers access to the social layer tying all of these apps together underneath. The real killer app for Google is not to turn Orkut into a Facebook clone. It is to turn every Google app into a social application without you even noticing that you’ve joined yet another social network.”