“As recently as September, Oracle Chief Executive Larry Ellison declared that online software companies “haven’t figured out how to make money.””
–There is a way for software companies to make money offering online software and that is through bundling it with other more profitable revenue streams.
“Oracle currently has a net profit margin of 24.6%. In contrast, online software company Salesforce.com Inc. has a net margin of just 4.4%, though it spends a higher percentage of revenue on sales and marketing.”
–An online software company that offers a competitive product at a great price and that dominates all related worldwide urls in a category could inexpensively market itself online with a skeleton ‘sales and marketing’ budget.
“Overall, online software is estimated to account for just $9.5 billion of the $284 billion businesses will spend on software this year, according to research company IDC. But online-software sales are rising more than 40% a year compared with 3.4% for software overall.”
–Imagine combining free online software (charging only an inexpensive connection fee and optional support), EMR (electronic medical records) and vertical integration to improve the delivery of healthcare. It is being created and will have a competitive advantage.
Categorised in: Dr. Dorfman on WSJ.com
This post was written by Dr. Jeffrey Dorfman