(InfoWorld) - Salesforce.com continued creeping toward the top tier of enterprise applications vendors in its most recent quarter, reporting subscription revenue of $65.6 million -- not far off the $78.3 million CRM (customer relationship management) software leader Siebel Systems generated in its latest quarter.

San Francisco-based Salesforce.com had total revenue of $71.9 million in its second quarter, the period ended July 31, marking a 77 percent increase from last year. Net income for the quarter was $5 million, translating to $0.04 per share, in line with the consensus estimate of analysts polled by Thomson First Call.

The company's customer base rose to 308,000 subscribers from 16,900 companies. While Salesforce.com's traditional forte is SMB (small and medium business) customers -- its average deal is for less than two dozen licenses -- much of its recent growth has come from larger deals. "This was an incredible quarter for enterprise traction," Chief Executive Officer Marc Benioff said Wednesday on a conference call with analysts following Salesforce.com's financial results release. "That was really surprising to us." To back up his remarks, he rattled off a half-dozen deals Salesforce.com signed during the quarter for more than 1,000 licenses, including a 5,000-seat sale to Merrill Lynch & Co. Inc.

Salesforce.com is the largest and most visible of a pack of companies changing the enterprise applications market by delivering ERP (enterprise resource planning) and CRM functionality as a hosted software service. Its fiercest rival is Siebel, the pioneering CRM vendor that essentially invented the field, but which also embodies the traditional model of pricey, complex software that Salesforce.com loudly decries. While spending is shrinking in the high-end enterprise market Siebel historically served, it has been growing quickly in the SMB end of the market. If the two companies continue on their current paths, Salesforce.com could hit a significant psychological milestone by the end of the year and pass Siebel in quarterly license sales.

Salesforce.com's customer base of subscribers remains well ahead of Siebel's, which stood at 40,000 as of June 30, the end of Siebel's last quarter. Benioff, never one to back away from tossing gasoline on the flames of that rivalry, boasted to analysts, "We added more subscribers in this quarter, the last ninety days, than Siebel has total."

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