Playing Catch-up, Microsoft Finally Enters Hosted CRM

Years after upstarts like Salesforce.com Inc. broke ground in the hosted customer relationship management business, Microsoft Corp. last week finally unveiled its own hosted service at the companys Worldwide Partner Conference in Denver.

Users and analysts noted that Microsoft appears to be looking to gain market share by keeping the price of its Dynamics Live CRM service well below those of far more established products.

Had Microsoft entered the fray earlier, the price tag would have persuaded Salesforce.com customer Bella Pictures Inc. to take a serious look at the service, said Tom Kramer, president of the San Francisco-based photography firm. In general, I rarely have a preference for Microsoft, he added.

Josh Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, Calif., said Microsoft may succeed in the hosted CRM business if it can keep prices well below those of rival products over the long term.

Their intention to do it based on price [gives Microsoft] a chance for a decent amount of success, he said.

A low-end Dynamics CRM Live offering will be available at no charge through the end of this year. After that, the price will rise to $39 per user per month in 2008 and then to $44 per user per month in 2009. The service will be sold exclusively by partners.

An Enterprise version, which is expected to start shipping next April, will be priced at $59 per user per month. Salesforce.coms low-end price is about $65.

Salesforce.com founder and CEO Marc Benioff noted that Microsoft has yet to deliver the product and added that the reality is, coming up with one that has an inferior price speaks more to the inferior quality of the technology than to its competitiveness as a product.

Nick Garbidakis, chief technology officer at the American Bible Society in New York, said that Dynamics Live CRM will appeal mostly to smaller organizations that dont need to integrate it with other applications. The ABS runs an internally developed CRM system that has strong links to its own systems, so it isnt interested in Microsofts hosted offering at least in the short term, Garbidakis said.

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