Salesforce continues to pioneer the cloud model

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marketwatch.comSalesforce.com Inc. hasn’t reached the Google-grade milestone of becoming a verb. But in Silicon Valley, Salesforce has inspired a cadre of followers–despite a steady flow of red ink that continued in its quarterly results announced Thursday.

The 16-year-old company, which makes software used by salespeople and customer-service call centers, has become a role model for other business-software vendors.

Traditionally, software companies sold programs for installation on the customers’ computers, as well as contracts to keep the software updated. Salesforce popularized a new approach known as software as a service, or SaaS, selling software as a subscription service that runs on Salesforce’s own data centers, much like Netflix Inc. streams movies to consumers. Customers pay less up front, but they may stick around for a long time, generating bigger profits over the long term.

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