Salesforce.com 2010 Annual Report Download - page 21

Table of Contents
In addition, if we finance acquisitions by issuing equity or convertible debt securities, our existing stockholders may be diluted which could affect the
market price of our common stock. Further, if we fail to properly evaluate and execute acquisitions or investments, our business and prospects may be
seriously harmed and the value of your investment may decline.
We rely on third-party computer hardware and software that may be difficult to replace or which could cause errors or failures of our service.
We rely on computer hardware purchased or leased and software licensed from third parties in order to offer our service, including database software
from Oracle Corporation. This hardware and software may not continue to be available at reasonable prices or on commercially reasonable terms, or at all.
Any loss of the right to use any of this hardware or software could significantly increase our expenses and otherwise result in delays in the provisioning of our
service until equivalent technology is either developed by us, or, if available, is identified, obtained and integrated. Any errors or defects in third-party
hardware or software could result in errors or a failure of our service which could harm our business.
If the market for our technology delivery model and enterprise cloud computing services develops more slowly than we expect, our business could
be harmed.
The market for enterprise cloud computing application services is not as mature as the market for packaged enterprise software, and it is uncertain
whether these services will achieve and sustain high levels of demand and market acceptance. Our success will depend to a substantial extent on the
willingness of enterprises, large and small, to increase their use of enterprise cloud computing application services in general, and for CRM in particular.
Many enterprises have invested substantial personnel and financial resources to integrate traditional enterprise software into their businesses, and therefore
may be reluctant or unwilling to migrate to an enterprise cloud computing application service. Furthermore, some enterprises may be reluctant or unwilling to
use enterprise cloud computing application services because they have concerns regarding the risks associated with security capabilities, among other things,
of the technology delivery model associated with these services. If enterprises do not perceive the benefits of enterprise cloud computing application services,
then the market for these services may not develop at all, or it may develop more slowly than we expect, either of which would significantly adversely affect
our operating results. In addition, we may make errors in predicting and reacting to relevant business trends, which could harm our business. Our success also
depends on the willingness of third-party developers to build applications that are complementary to our service. Without the development of these
applications, both current and potential customers may not find our service sufficiently attractive. In addition, for those customers who authorize third-party
technology partner access to their data, we do not warrant the functionality, security and integrity of the data transmission or processing. Despite contract
provisions to protect us, customers may look to us to support and warrant the third-party applications, which may expose us to potential claims, liabilities and
obligations for applications we did not develop or sell.
The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed.
The market for enterprise CRM business applications and development platforms is highly competitive, rapidly evolving and fragmented, and subject to
changing technology, shifting customer needs and frequent introductions of new products and services. We compete primarily with vendors of packaged
CRM software and companies offering on-demand CRM applications. We also compete with internally developed applications and face, or expect to face,
competition from enterprise software vendors and online service providers who may develop toolsets and products that allow customers to build new
applications that run on the customers' current infrastructure or as hosted services. Our current competitors include:
• enterprise software application vendors;
• on-demand CRM application service providers;
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