Software as a Service: Price Wars Coming?

It was inevitable. As Salesforce.com continues to ring up record sales, rivals, startups and even managed service providers are saying they can offer the same quality software as a service -- at a lower price.

A case in point: InfoStreet Inc. (www.infostreet.com) has launched a new version of its online CRM application. It targets small businesses, "particularly those which do not wish to spend $65 and up (per user) price of other Web based CRM offerings," according to an InfoStreet press release. If you didn't take the hint, InfoStreet was pointing to Salesforce.com pricing, and the company says its SaaS service can be had for about $10 per month per user.

But this is more than a SaaS play. There's a managed services angle here, too.

InfoStreet is blending the worlds of SaaS and managed services. In addition to hosting a CRM service, InfoStreet offers email, email archiving, anti-virus and anti-spam services, file sharing and other managed services.

InfoStreet's strategy reinforces the convergence of managed services and SaaS, a key theme that continues to pop up regularly on MSPmentor. Level Platforms CEO Peter Sandiford tackled the issue of SaaS and managed services head-on in his January blog contribution to this site.

I doubt InfoStreet will steal many -- if any -- customers from Salesforce.com. But that's not the point. MSPs must continue to target market segments with clear messages that differentiate themselves from the competition. Today, InfoStreet essentially raised its hand and said "we're the low-cost alternative to Salesforce.com, and we're bringing CRM to the small business masses."

That's a pretty strong statement ... assuming InfoStreet can truly generate a profit at those price points.

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