Salesforce.com Challenges Oracle in Database Market

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Cloud-based software maker Salesforce.com Inc is entering the business of selling database programs that manage vast arrays of corporate data, challenging leader Oracle Corp in the $21 billion a year market.

Salesforce -- the world's biggest maker of cloud-based software that its customers access over the Internet -- announced its new Database.com service on Tuesday as it diversifies its lineup of software programs for businesses.

The company has long generated the bulk of its revenue from selling software for managing corporate sales and marketing activities, but has branched into other areas in recent years in a bid to accelerate sales growth.

Database.com is built on the same cloud computing model as Salesforce.com's existing products: Salesforce.com will host the database, which customers will access via secured connections over the public Internet. The fee covers software costs, hosting and data storage.

Database.com, which will be available next year, can store data for applications written for Facebook, Twitter, Apple Inc's iPhone and iPad as well as Google Inc's Android operating system for smart phones.

It is also compatible with applications that run on cloud computing systems from Amazon.com Inc, Google and Microsoft.

The makers of top-selling databases -- Oracle Corp, Microsoft Corp and International Business Machines Corp -- typically require businesses to buy software in advance, install it on their own computers and then employ staff to maintain those systems.

"It's an alternative delivery method," said Gartner analyst Donald Feinberg, who estimates the value of the database market at about $21 billion a year. "They could very possibly be on to something."

Database.com is only the second major fully cloud-compatible database management software system on the market, following Microsoft's launch earlier this year of SQL Azure, Feinberg said.

Feinberg said that it would likely take at least several years for cloud databases to present a serious challenge to old-style versions of the technology as many businesses are uneasy about handing sensitive data over to a third party.

Yet he added that Salesforce.com's entrance in the market ought to spur adoption because the company has a reputation for providing reliable service and good data security.

Salesforce.com Chief Executive Marc Benioff was due to unveil the new service at a users conference in San Francisco on Tuesday.

(Reporting by Jim Finkle)