For some time now, sceptics have been predicting the bursting of Salesforce.com’s bubble as the on-demand applications pioneer faces competition from SAP, Microsoft and other giants, as well as numerous startups. However, with its stock at a high and a valuation of well over $6bn, one of the most remarkable success stories in business software for many years is showing that it has stamina and a desire to grow its base way beyond current areas of focus.

In its brief eight-year history, Salesforce has ridden out the dot-com crash, gone public, and grown its business at a rapid clip. This is the case not only with revenues and profitability but also the building out of a series of complementary capabilities designed to take the company beyond sales force automation (SFA) and customer relationship management (CRM) tools to become a platform on which a series of other applications can sit.

Whereas Microsoft built a huge applications business in its own right with Office and server programs, leaving third parties to fill in gaps on Windows, Salesforce’s strategy is to provide only core programs and make its platform a base for others. If it succeeds, Salesforce stands to become one of the most important software companies on the planet ­ but will it succeed?

The early signs are encouraging. The AppExchange online marketplace for trying and buying applications now has more than 725 applications and there have been over 31,000 customer installations. Participants include Adobe, Borland and Skype, as well as a crowd of smaller firms. Salesforce also recently began offering its underlying Apex development language to customers and software developers.

Customer numbers continue to grow at about 50 per cent per year and there is no arguing with the broader upward trend towards using software as a service (SaaS), with analyst Gartner predicting that 25 per cent of new business software sales will fall into the SaaS category by 2011.

Salesforce is also surfing a wave of goodwill thanks to distinctive touches, such as making software development plans transparent through the Idea Exchange site, and the Salesforce Foundation, which is perhaps the most visible philanthropic programme developed by any IT company to date.

Trust in the company has also been bolstered by a string of very large customer wins with some of the world’s largest companies.

However, questions remain. In particular, sceptics are unsure to what extent partners will pay to sit on the Salesforce platform, and note that many popular AppExchange apps are from Salesforce itself.

“It’s a good program and you get tons of visibility but it’s not quite there yet,” said one AppExchange partner, speaking on condition of anonymity. “There’s still a feeling that this is really a Salesforce game and that the risk/reward parameters might need to be adjusted.”

Despite this, other AppExchange partners, such as Saaspoint chief executive John Appleby, report that in the past few months there has been “a sharp uptick” in interest in programs.

Another concern is over so-called “light-touch users”, those who only access the Salesforce platform occasionally, for items such as expense reporting. SAP recently published a specific tariff for these users in its price list for Business ByDesign, the service that takes it into competition with Salesforce for companies in the low hundreds of users. Salesforce prefers to broker individual deals with customers, according to the firm’s president, Jim Steele.

Another battle for Salesforce comes from persistent rumours that it could be acquired. Steele said that Salesforce’s high valuation is a deterrent, but that might not deter the growing number of vultures circling overhead at a time when software mergers and acquisitions are rife. Oracle has shown a huge appetite for multibillion-pound deals and a willingness to go after former enemies, such as Siebel Systems. Salesforce chief executive Marc Benioff is ex-Oracle and Oracle chief executive Larry Ellison retains a significant shareholding in Salesforce.

Even more intriguing is the suggestion of an acquisition of Salesforce by Google, creating the possibility of huge new backing and an end to debate about the company’s future. There are many Salesforce supporters who would welcome a deal.

“I think it would be great if Google bought it and just let it continue on, but maybe had some Google integration,” said Eric Berridge, co-founder of Bluewolf, a company that provides services on the Salesforce platform.

Another supporter of the rumoured deal is Ian Campbell, chief executive of Nucleus Research. “The question for the customer [would become] ‘Who do I trust more to deliver an on-demand enterprise application, Google or Oracle?’” Campbell wrote in an email to IT Week in May this year.

Salesforce’s success has also encouraged a stream of imitators. With its new Dynamics CRM 4.0 release featuring a multi-tenant architecture and lower fees for partners, Microsoft will make it more attractive for customers to use hosted versions of the program. Although CRM has had a slow start, integration with the Microsoft stack, and Outlook in particular, will appeal to many buyers.

SAP is phasing in the introduction of Business ByDesign and is likely to have an impact in European markets and with large firms that have smaller satellite operations. For companies that have a large SAP deployment for core operations, using the same company for new projects will be attractive.

Salesforce has plenty of challenges and plenty of competitors but this situation is nothing new for companies that take on the IT hegemony. The good news for buyers is that the disruptive changes currently to be observed throughout enterprise software will force a battle royal for the hearts and minds of customers.