In SaaS, Do First Movers Finish Last?

Should you race to gain “first-mover advantage” in the software as a service (SaaS) market? Or should you sit back and learn from the early mistakes your rivals make? Before you answer that question, consider the situation at eGain Communications — which is celebrating its tenth year as a SaaS specialist.

A decade ago, most software hosting companies focused on the application service provider (ASP) model. But most ASPs failed because of a range of problems, from spotty broadband coverage to shoddy desktop and server software that required too much horsepower.

eGain: Still In the Game

Even so, quite a few companies emerged from the ASP and dot-com implosions, and survived to focus on SaaS. eGain, for one, is celebrating its tenth anniversary in the SaaS industry. Ten years in any tech market is an impressive milestone.

But eGain is not to be confused with Salesforce.com, the top performer so far this year in MSPmentor’s SaaS 20 Stock Index. eGain shares closed at about 90 cents each on June 24, down from a far-more-respectable $5 in July 2003.

Still, eGain’s customer service and contact center software appears to be gaining momentum. For the company’s Q3 ended March 31, year-over-year quarterly revenue jumped 64 percent to $8.8 million. And the company pushed into the black by delivering a $542,000 profit, compared to a $2.2 million loss in the comparable quarter last year.

Now let’s get back on topic: Did eGain benefit from getting into the SaaS market so early, or do first movers typically fail?