[itsprofitbaron]

Your Salesforce example highlights a SaaS replacing Enterprise Software - Salesforce vs. Siebel. Regarding your point about software being sticky like some hardware offerings have been commoditized - software can also suffer this to some extent (especially in the SaaS space as noone is doing anything that revolutionary that a competitor or competitors cannot come along and literally clone them).

I do however agree with you about the switching costs, Salesforce actually use this as part of their lock-in & differentiator in that they have got their users to associate them with CRM - their stock ticker is it etc - this they become product evangelists for them. As a result, there is a network effect built around Salesforce which has helped them create a lock-in.

However, that sill does not mean users won't switch (look at the new http://www.moz.com it isn't a coincidence that the UI looks like Google Analytics - that is one such example of how to "break" the lock-in). Moreover if a customer is offered a Salesforce alternative for 20% of the cost & it does exactly what Salesforce can do (as well as having a similar UI) that becomes a serious incentive for a business to switch - after all most of the decisions are made by the CIO etc who doesn't necessarily use the product day-to-day.

Finally to address your point about there being no commodity version of MS Office the problem is, is that no alternative has actually managed to provide a product to a similar level - Excel is by far the most superior spreadsheet product on the marketplace.