Salesforce.com's Chatter to Go Freemium
Salesforce.com CEO Marc Benioff reportedly told analysts today that the company will announce a free version of its enterprise activity stream product Chatter at the annual Dreamforce event in San Francisco next month.
Context & Ripple Effects
Marc Benioff has been building toward this for most of 2010: he argued back in February that enterprise software should take its design cues from Facebook and become more social, then spent his October Gartner keynote contrasting cloud-native Salesforce with acquisition-heavy 'supervendors' like Oracle while likening Zuckerberg to Gates. Making Chatter free — reportedly announced at next month's Dreamforce — turns that rhetoric into a distribution strategy.
The move extends a pattern Salesforce started earlier in its history: its community idea-voting site in 2007 was an early experiment in importing consumer-web mechanics into the enterprise. A free tier for Chatter applies the same logic to collaboration itself, using a zero-price activity stream as the front door to the paid CRM platform.
First-order effects
- Salesforce's own sales motion changes immediately: every CRM customer and prospect gets the activity-stream product at no cost, making Chatter a default feature of the platform rather than a separately sold SKU.
Second-order effects
- Paid-only enterprise social software vendors lose their pricing floor against a free incumbent product, forcing them to differentiate on depth of integration rather than on the stream itself — while Salesforce gains a large non-paying user base it can convert into paying CRM seats over time.
Third-order effects
- If the pattern holds, freemium distribution becomes table stakes for enterprise software: consumer-style adoption funnels replace top-down license sales, which is precisely the shift Benioff has been arguing for publicly since February 2010.
The trend: Enterprise software is adopting consumer-web distribution — free social features as the entry point to paid platforms — with Salesforce pushing the model hardest against legacy vendors.