Benioff, ISV Rivals Fire Back At Microsoft&s SMB Strategy

At the Microsoft Business Summit on Wednesday, Microsoft Chairman Bill Gates, CEO Steve Ballmer and other company bigwigs outlined a new midmarket server and a low-end accounting package and rebranded Microsoft Business Solutions (MBS) applications to Microsoft Dynamics. The Redmond, Wash., software giant also put Salesforce.com on notice with talk about its own hosted CRM.

That news raised eyebrows because Microsoft has said in the past that it would rely on partners like Surebridge--now NaviSite--to host its offerings. But now it appears that Microsoft will extend its hosted efforts beyond bCentral and MSN and into the MBS realm.

Though one Microsoft spokesperson said there had been no strategic change, that didn&t appear to be the case on Wednesday. Until now, Microsoft CRM wasn&t viewed as a robust hosting platform, but the latest release, due out later this year, is expected to offer better multitenancy support and other foundational perks. Company executives mentioned Salesforce.com, a leader in hosted CRM, several times by name as a target.

As is usually the case, Benioff was loaded for bear. “[Microsoft's] CRM efforts to date have been a major failure, perhaps the worst in Microsoft history," he told CRN via e-mail. The company's "enterprise activities" also have failed, "especially the purchase of Great Plains," Benioff wrote.

He and other competitors are quick to point out the difficulty Microsoft has had pushing beyond its Windows and Office franchises in the hope of boosting growth and profit. Like most ISVs, Salesforce.com is a rival and a partner of Microsoft. The San Francisco-based company touts tight integration with Microsoft Outlook, for example.

Microsoft bought Great Plains five years ago for $1.1 billion and made it the centerpiece of its SMB applications push. It subsequently bought Navision with its eponymous Navision and Axapta ERP applications. Microsoft has spent the ensuing years trying to integrate those pieces and build a profitable business apps business, with less-than-hoped-for success.

On the small business accounting front, Intuit is also returning fire over Microsoft's low-end accounting package. Microsoft has tried and failed at small-business financial software several times, said Dan Levin, vice president of product management at Mountain View, Calif.-based Intuit.

"If you're a third party developer, who would you rather write for, 3 million active users or four active users? The leader in the market for 15 years, or a vendor who's tried three times and quit each time?" Levin said.

He wouldn&t say if QuickBooks 2006, due out later this fall, will match Microsoft's $149 price for Small Business Accounting 2006. The current QuickBooks can be purchased for about $180 with a discount, but he noted that the sticker price isn't everything, even for accountants.

"If you look at the Microsoft TaxSaver launch, they tried free, and that didn't work,” Levin said. “Our customers use our software an average of eight hours a week. It's integral to their business. Every accountant knows QuickBooks. Every community college has courses in QuickBooks."

Sage Software, a big power in SMB business applications, also came out swinging at Microsoft, which is touting tight Office integration with its new small business accounting. Office linkages are a priority for all accounting and business software makers. Salesforce.com, Intuit and Sage all offer Outlook support, for instance.

"The real premise of Microsoft's strategy is Office integration, and we agree that's important,” said Doug Meyer, president of Sage's Small Business Division in Atlanta. “We've done it for six years. It's not a point of differentiation, really.” Meyer added that Sage&s Peachtree Accounting software offers robust, customized versions for verticals such as manufacturing, distribution, construction and nonprofits.