Big bad wolf threatens to blow down the house of another little piggie...
(yesterday NAS, today CRM: this sucks!!)
(in 10 years will there be only 1 software company left?)
CRM Industry Reacts to Microsoft Incursion
Thu Mar 7, 2:02 PM ET
Erika Morphy, www.CRMDaily.com
When Microsoft (Nasdaq: MSFT - news) announced that it would be shipping its first major CRM application built on .NET, executives from the software giant were very clear about its go-to-market strategy. "It is developed for the small market," Microsoft senior product manager Holly Holt told CRMDaily.com.
But industry speculation quickly spread about Microsoft's true intentions.
Would the software giant be content with the bottom tier of the CRM market? Or, would it one day begin to compete with such companies as Pivotal (Nasdaq: PVTL - news), Onyx (Nasdaq: ONXS - news) -- or possibly even CRM frontrunner Siebel (Nasdaq: SEBL - news)? As of now, Microsoft has business relationships with all of those companies.
Salesforce.com CEO Marc Benioff told CRMDaily that while Microsoft's initial offering targets the small and mid-size market, the company has "an unspoken goal of targeting all of CRM."
Expect the Unexpected?
Part of what is fueling the rumor frenzy is the fact that the announcement was so unexpected, Louis Columbus, senior analyst with AMR Research, told CRMDaily. "They shocked a lot of people by moving so quickly into the CRM market. Everything they had said previously indicated it would be announced later this year."
To be sure, Microsoft has reassured its channel partners and other business allies that its latest release is not the beginning of a move into the high-end CRM market. Instead, Microsoft will continue to target the mid-size market through its Siebel relationship, it said.
Benioff expressed skepticism. "Microsoft will say they don't compete against their partners, such as Siebel, but history has shown otherwise. Siebel should have known better -- perhaps Microsoft, too."
Remaining Calm
Not everyone believes that Microsoft has sounded the warning bell.
"It doesn't sound like they are launching a worldwide war," Gartner (NYSE: IT - news) research director Joe Outlaw told CRMDaily.
But, he suggested that it would be worthwhile for CRM vendors to keep an eye on subsequent announcements as the fourth quarter -- when the Microsoft product will be available -- approaches. "A lot of things have been left unsaid."
What will prove most telling, Outlaw said, are signs that indicate whether Microsoft's CRM initiative was driven mainly from Redmond, where the company has its headquarters, or Fargo, North Dakota, where Microsoft's recent acquisition, Great Plains Software, is based.
"Before we can determine how big a deal this actually is to the Microsoft empire we need to see evidence that it has mainly been spearheaded out of Redmond," Outlaw said.
According to Microsoft's Holt, the CRM launch was a joint initiative between the Redmond team and the Fargo team. "This is their first baby," she said.
Out in Front
Perhaps a more relevant question is not where Microsoft is headed -- eventually -- with its CRM aspirations, but rather who will be affected when its product comes out.
On some level, Microsoft's foray into CRM will affect everyone in the business.
"It really will broaden the general market awareness of what CRM is," AMR Research's Columbus said, noting that if an observer can see the glass half full, there is an upside to Microsoft's coming release.
Columbus does not think that Microsoft is likely to scale up or make any drastic moves, such as acquiring Siebel, "which would be the fastest way to dominate the CRM marketplace."
Not Worried?
Nonetheless, after Microsoft made its announcement last week, a number of vendors occupying the mid-tier -- the space that is the most likely to be threatened by any ambitions Microsoft might have to grow in the CRM industry -- were quick to say they did not expect any problems.
"The market Microsoft is targeting is fundamentally different from Pivotal's target market," Bo Manning, CEO of Pivotal, told CRMDaily.
"Microsoft Great Plains is trying to grow into the mid-market after servicing smaller enterprises with point solutions," Robert Kear, J.D.Edwards (Nasdaq: JDEC - news) vice president for CRM strategy, said.
"They will continue to service larger mid-sized enterprises through a partnership with Siebel's mid-market solution," Kear told CRMDaily. "Siebel is reaching down from their normal focus on larger enterprises. In both cases, it is a challenge for Microsoft Great Plains to configure the technology to the mid-market's needs."
In the Crosshairs
What is becoming evident, however, is that the vendors of CRM products designed for smaller companies will take a hit.
"This will be more of a challenge to companies like Upshot, Front Range and Oncontact," Columbus said. "Those are the companies that will have to be very aware of what is going on."
Web service providers also will have to keep their heads up, observers say. After all, Microsoft is building its CRM offering on its .NET platform, making it possible to offer the infrastructure and application as a Web service.
Yet die-hard ASPs (application service providers (news - web sites)) like Salesforce.com say there is no comparison.
"Microsoft and Salesforce.com offer two completely different value propositions," Benioff said. "Microsoft CRM is not a service; it is software. It requires installation, integration and maintenance. It requires lots of different license fees -- the fuel of the Microsoft financial engine.
"We don't sell software, and we never will."
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