announces social-networking app opened up its annual Dreamforce conference in San Francisco on Wednesday by previewing Salesforce Chatter, a social-networking application the vendor dubbed a “Facebook for the Enterprise.”

The upcoming release bundles a variety of now-familiar features, such as personal profiles, real-time feeds from contacts and applications, groups and alerts. It can also integrate with Google Apps, the popular Twitter microblogging service and Facebook. is also providing a set of APIs (application programming interfaces) for tying other applications to Chatter. It will also be available on Windows Mobile devices, iPhones and Blackberries. The system will employ the same underlying security and sharing model as other applications built with the company’s development platform.

Chatter will be available “early next year,” CEO Marc Benioff said during a keynote address. It will be included in paid editions of Salesforce CRM and, and also available as a Chatter Edition that also includes Salesforce Content and for US$50 per user per month.

Much of Wednesday’s marathon, three-hour opening keynote was devoted to recapping various announcements from earlier this year. But Benioff reserved the final and brightest spotlight for Chatter, calling it the company’s “biggest breakthrough ever.”

He praised earlier-generation collaboration technologies, such as Lotus Notes and online meeting software, but said one “has to stop in awe” at “phenomenons” like Facebook and Twitter.

Meanwhile, Twitter users expressed mixed reactions to the announcement. One termed Chatter “a bit Mickey Mouse” and another said she could picture “executives running away screaming.” Others, though, were much more bullish: “Chatter is potentially huge — depends on how they open it to non-Salesforce customers.”

While Chatter’s general premise isn’t new,’s entry raises the competitive stakes for the many small, specialized vendors hoping to sell social networking platforms into enterprises. Moreover, social networking capabilities are a natural counterpart to CRM (customer relationship management) systems like’s, given the latter’s emphasis on continuous communication with customers and suppliers.

The announcement was also in many ways inevitable, said Ray Wang, a partner with the analyst firm Altimeter Group. “Customers have been expecting to do something like this. It’s something that had to happen. The market is moving so fast in these areas. It’s necessary for them to keep up.” 

While it took a decade for e-mail to gain widespread adoption, Twitter and Facebook needed only a couple of years to get hot, Wang added. 

Chatter is also just the latest example of expanding beyond its core CRM roots. The company recently announced a joint venture with Unit 4 Agresso,, that will develop and sell on-demand financials software.

In addition,’s corporate performance has remained strong despite the global recession. In third-quarter results reported Tuesday, the vendor said revenue had increased 20 per cent year-over-year to $331 million, and that it now has nearly 68,000 customers after adding 4,700 in the quarter.

As continues to grow, a couple of possible scenarios emerge, Wang said. It could be acquired by a larger company, such as Cisco Systems, that wants to expand its presence in software, or face competition from a new on-demand CRM offering introduced by such a player, he said. 

Meanwhile, “learned a lesson” from the fate of CRM vendor Siebel, which was acquired by Oracle, by moving quickly to become a platform provider through its development platform and AppExchange marketplace, Wang said. 

But if remains independent, it must decide what to build itself and what to leave to partners, he added. In addition, will face competition from alternatives like Microsoft’s nascent Azure cloud development platform. 

It also remains to be seen how the vendor will counteract a growing trend toward hybrid deployment models involving both on-premise and on-demand software, said 451 Group analyst China Martens via e-mail. “How does counter that, given it’s a SaaS pure-play?” may have already anticipated this need. It recently announced a partnership with Adobe around the latter’s RIA (rich Internet application) technology, which lets users create applications with off-line functionality. 

Dreamforce will continue through Friday in San Francisco.

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