When Synergy Research announced their Q2 SaaS marketshare results today, there was a bit of a surprise. Instead of Salesforce, leading the field, it was Microsoft. The shift actually happened a year ago, according to Synergy.
Salesforce was of course born in the cloud, while Microsoft represented the personal computer with Windows and Office as its signature products. But times and companies change, or at least they better, if they hope to survive long term.
That’s why the company began shifting to the cloud some years ago, and when Satya Nadella took the helm at Microsoft in 2014, it really put the pedal to the metal. Part of that involved Office 365, the cloud version of office, and another part of it involved Azure, the company’s infrastructure as a service offering. It’s worth noting that Synergy’s numbers only include the SaaS offering.
Hard to compare in SaaS
There are several caveats worth pointing out when it comes to measuring Saas marketshare. First of all, there is revenue versus marketshare. In that regard, with Salesforce on a $10 billion run rate, it’s still well ahead of Microsoft, Adobe, and any other SaaS player out there. (Microsoft Intelligent Cloud revenue was $7.4 billion in its most recent earning’s report in July.)
Secondly, it gets more difficult to compare SaaS products than it is platform or infrastructure services, since they tend to take up a variety of specialized business software categories like CRM, HR, collaboration, and ERP as examples. Each is a separate and distinct market unto itself, making it harder to make meaningful comparisons.
Thirdly, Microsoft could have some advantage when it comes to these numbers. That’s because many individual consumers could be using their software, whereas, it’s highly unlikely we would see individual consumers using CRM, marketing, or customer service software.
Of course, Microsoft also offers cloud software like CRM and ERP, but the majority of their marketshare very likely comes from Office 365 with Word, Powerpoint, Excel, Outlook, etc. — and that could be used by anyone, whether a business user or individual consumer. If you include OneDrive, Microsoft’s online storage product that could account for another significant chunk of its SaaS business, and like Office 365, anyone could take advantage of it.
So while Microsoft should rightly be proud to be named the marketshare leader this quarter, it’s worth keeping in mind that it’s challenging to make true apples-to-apples comparisons across SaaS vendors.
Photo: Heisenberg Media on Flickr. Used under CC by 2.0 license.