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Salesforce Buys Heroku

Its acquisition is supposed to position Salesforce “as the cornerstone for the next generation of app developers” said Wednesday morning that it's buying Heroku, the Ruby and Ruby on Rails application platform-as-a-service house, for $212 million cash net of what the privately owned 30-man cloud player has on hand plus roughly $27 million in stock and another $10 million in cash for unvested Heroku shares. So that makes $249 million then.

According to Salesforce, Ruby is the language of what it calls Cloud 2 apps - the currently popular social, collaborative, mobile, real-time stuff - and Heroku's platform is built along the same multi-tenant lines as its own platform.

Its acquisition is supposed to position Salesforce "as the cornerstone for the next generation of app developers," according to CEO Marc Benioff.

Salesforce already supports Java applications via its VMForce alliance with VMware.

Heroku makes money by hosting some 105,000 applications written in Ruby on its servers on Amazon, a reported 2,600 new apps just last week.

The infrastructure can be used to develop, test and deploy applications in production. Customers include Comcast and Best Buy.

Heroku just added a Facebook App Package obviously for developing applications for Facebook. Salesforce, meanwhile, has its own Facebook-like Chatter collaboration widgetry.

There are supposed to a million-odd developers using Ruby, the language of Groupon, Hulu and Twitter.

Heroku CEO Byron Sebastian claims the combination of Heroku and Salesforce will "bring cloud application platforms into the mainstream of the enterprise."

Salesforce expects Heroku to help it take a bigger piece of the worldwide market for public cloud services, which IDC estimates will grow 27% a year to $55.5 billion in 2014.

The deal is supposed to close by the end of January and cost Salesforce two cents a share this quarter and 12 cents-13 cents in fiscal 2012.

Heroku was started in 2007 and picked up $13 million in two rounds from Y Combinator, Redpoint Ventures and Ignition Partners. Ignition is by far its largest investor providing $10 million.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at) or paperboy(at), and by phone at 516 759-7025. Twitter: @MaureenOGara

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