In $400 Million Deal, Salesforce to Piggyback on Amazon's Growing Cloud

By Robert McMillan 

Salesforce.com Inc. is pinning its international expansion plans on Amazon.com Inc.'s cloud-computing services, a deal that will be worth $400 million over four years to Amazon, according to a person familiar with the matter.

The deal highlights the increasingly tight relationship between the two companies. Earlier this year, Amazon agreed to expand its use of Salesforce's customer-relationship service.

On Wednesday, the two companies said Salesforce plans to use Amazon's computers to deliver more of its services, part of a strategic shift for Salesforce.

For most of its 17-year history, Salesforce offered its Internet-delivered software from servers in its own data centers. But it has increasingly leaned on Amazon Web Services as it has acquired new companies and built new services. The company's Heroku software developer services and SalesforceIQ customer-relationship management products both use AWS, as will the Salesforce IoT Cloud, the company's new analytics platform for computerized devices.

In a blog post, Salesforce said that it will now use Amazon's cloud for a wider range of products, as it looks to deliver them internationally.

Amazon has data centers spread out over a dozen regions of the world and is planning to expand into Canada, the U.K and India, which will make its services run faster in those countries.

On Friday, Salesforce disclosed in a regulatory filing that it had signed a four-year deal with an unnamed infrastructure services company worth $400 million. The person familiar with the matter said that provider is Amazon.

By using Amazon's infrastructure instead of its own servers, Salesforce will be able to expand into new countries more rapidly and efficiently, the company said. It will give more details on its international expansion plans later this year, Salesforce said.

Salesforce said it would continue to build its own data centers, but the Amazon relationship could reduce its reliance on Oracle Corp., which supplies both hardware and software to Salesforce, and is also a rival.

"I think that they're trying to reduce their dependency on Oracle. That's the key," said Brent Thill, an analyst with UBS AG. "They built the company on Oracle and they want to reduce that dependency."

Oracle declined to comment.

Write to Robert McMillan at [e-mail]

(END) Dow Jones Newswires

May 25, 2016 20:45 ET (00:45 GMT)

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