Salesforce buys Web-collaboration startup Dimdim to bring Chatter up to speed

The race between enterprise-focused social networking services Chatter, run by Web-software giant Salesforce.com, and Yammer, a darling of the venture-capital set, goes on.

Salesforce announced today that it will buy Web conferencing provider Dimdim for $31 million to bring real-time messaging and collaboration tools to its Facebook-style enterprise collaboration service Chatter.

Dimdim provides its users with a cheap alternative for setting up online and remote meetings. That includes real-time messaging, screen sharing and other additional services. Most of its services have been popularized by consumer-oriented services like LinkedIn and Facebook.

“We really want to follow the Facebook model,” said Kendall Collins, chief marketing officer for Salesforce. “Many of the technologies that Dimdim brings are similar to key aspects of what Facebook delivers.”

The actual Dimdim service will not shut down, and Salesforce will honor all existing contracts. They won’t be accepting any new contracts as the technology is folded into Chatter. Salesforce doesn’t plan on using Dimdim for its web conferencing service, despite that being Dimdim’s specialty. Instead, the company plans to duct tape some of Dimdim’s technology onto its Chatter service.

“Think about that green dot and knowing that people are online and you can communicate in real time, that’s a critical aspect of what Dimdim delivers,” Collins said.

Salesforce didn’t disclose when the new features would go live on Chatter, but said that a working demo would be available at its 2011 Dreamforce conference in August later this year. Salesforce doesn’t see it as a way to bring its social collaboration service up to speed with the rest of its competitors, Collins said.

But Yammer, one of the company’s largest competitors, has had real time chat and Skype integration for video conferencing for some time now, and is also seeing quite a bit of traction. Yammer has been deployed by more than 100,000 companies — and 80 percent of the largest companies in the world on the Fortune 500 list use the service. Yammer also recently picked up $25 million in funding to help expand its efforts.

Chatter by comparison is used by more than 60,000 companies. Salesforce’s largest Chatter customer, Dell, has around 100,000 active users — while the rest of its paying customers have around 5,000 active users.

Chatter — originally a quite costly service, requiring users to be Salesforce customers or pay $15 per user per month — became free to use late last year in order to compete with the freemium collaboration services like Yammer. The move to a freemium model, which entices users with a free service and then charges for premium services, was a long time coming according to some of its investors. Salesforce also plans to release Chatter.com, an enterprise-style social network like Facebook, sometime this year.

This is the third major acquisition by Salesforce in less than a month. Salesforce dropped a whopping $212 million on ruby-on-rails web application developer Heroku in December, and then spent undisclosed amount on email contact manager Etacts. That’s almost half of the cash Salesforce had on hand at the end of its most recent operating quarter, according to the company’s most recent filing with the Securities and Exchange Commission.

Dimdim has raised $9 million in funding and is a graduate of the DEMO Fall 2007 conference. Dimdim was founded in March 2006 and is headquartered in Lowell, Mass. Its investors include Index Ventures, Nexus Venture Partners and Draper Richards.

[Photo: antwerpenR]