IBM-Salesforce partner on AI
The companies have said that under the partnership, they’ll integrate their respective AI platforms to deliver more value to their customers. The companies already share thousands of clients in industries such as financial services, healthcare, and retail.
Salesforce’s in-house AI technology is called Einstein, while IBM’s cognitive computing technology is called Watson.
Using Watson to build more intelligent products
Salesforce says that the integration of Einstein into its products such as Sales Cloud, Marketing Cloud, and Service Cloud will yield tremendous benefits for its customers.
As such, teaming up with IBM is expected to give Salesforce access to Watson’s technology to build even more AI value into its products, boosting sales as a result. Salesforce generated revenue of $2.3 billion in fiscal 4Q17, a rise of 27% compared to a year earlier, as we can see in the chart above.
Why the partnership is a threat to Microsoft
Executives at Salesforce and IBM have said that the companies’ dreams align, and they believe that they can achieve more together. The partnership will likely also rattle Microsoft, a competitor to both companies. Microsoft and Amazon (AMZN) are the top cloud infrastructure vendors, while IBM, Oracle (ORCL), and Alphabet’s (GOOGL) Google are underdogs.
In an interview with Fortune magazine following the announcement of the IBM-Salesforce AI collaboration, Marc Benioff, Salesforce’s CEO, talked about the partnership’s providing Salesforce the opportunity to begin replacing Microsoft products at IBM.
If that’s what Salesforce is thinking, then it means the company will likely also try to persuade IBM customers who use Microsoft’s products to defect to its platform, potentially dealing Microsoft a blow in the productivity software market.