Thoughts on salesforce.com and Heroku

At today’s Dreamforce show the big news was that salesforce.com has acquired Heroku for $212 million in cash. Heroku is a Platform-as-a-Service offering for Ruby on top of Amazon Web Services. This is salesforce.com’s largest acquisition ever, and is more dramatic considering that it is estimated that Heroku has less than $10 million in revenue.

Here are a few thoughts on the acquisition:

• salesforce.com has the Force.com platform for building apps but it requires a non-standard Java-like language that hasn’t had much adoption.
• salesforce.com has the VMForce.com initiative in private beta which will run Java apps but Java apps are much more cumbersome to write compared to Ruby, PHP, and Python.
• salesforce.com just launched database.com for a true cloud database offering but has a $10/user/month pricing in addition to storage costs which make it unlikely to catch on.
• Heroku offers a true PaaS with pricing inline with the normal hosting industry making it the first real initiative that will grow salesforce.com outside their current core uses.
• Heroku is built on Amazon Web Services which offers virtual private servers in the cloud. Heroku takes the Amazon cloud instances and sub-divides them further into even smaller instances as well as takes away much of the complexity. It is brilliant.

My take is that this is a credible move requiring at least three years to prove worthwhile. It is super risky and brilliant at the same time.