Microsoft aims at Salesforce.com with CRM offer

Redmond slices prices temporarily in hopes of cutting into Salesforce.com's ample lead

Microsoft is hoping to lure business away from Salesforce.com with a new offer that allows customers to buy Dynamics CRM Online seats for US$34 per user per month for the first year of service, a roughly 25 percent drop from the current $44 monthly charge.

The offer significantly undercuts Salesforce.com's Professional edition at $65 per user per month, and its Enterprise edition, which costs $125 per user per month. Microsoft made the announcement Thursday at the start of a European road show that kicks off in London.

It's just the latest attempt by Microsoft to boost sales of CRM Online. In July, it launched a promotion that gives partners a 40 percent fee on new CRM Online subscriptions, up from 18 percent.

Microsoft has a long way to go before it catches up with Salesforce.com, which reports having more than 82,000 customers. Dynamics CRM has 23,000 customers in total, but Microsoft does not reveal how many of them are for CRM Online, according to a spokeswoman.

Meanwhile, this week Microsoft will also discuss plans for a number of its Dynamics ERP (enterprise resource planning) products.

It's hoping to sell Dynamics AX into large enterprises via a new connector for SAP systems that enables "two-tier" ERP implementations. An enterprise's new division or branch office would use Dynamics instead of adding more SAP licenses under such a scenario. Rival NetSuite has pursued a similar strategy.

In addition, Dynamics AX for Retail, first announced earlier this year, will be available in 22 additional markets by February 2011, and Dynamics NAV partners will gain new tools in December for developing vertical offerings, Microsoft said.

Part of the vendor's value proposition for Dynamics has been the applications' proximity to widely adopted Microsoft technologies like SharePoint and the Office suite.

In recent years, competitors such as Infor and Epicor have moved to align their software with the Microsoft technology stack, offering customers similar types of integration scenarios. Epicor made a number of related announcements earlier this week.

This presents a mixed situation for Microsoft, said Altimeter Group analyst Ray Wang. On one hand, the company benefits by having multiple vendors bet on its technology, he said.

But in turn, "the impact on Dynamics is that it needs to sharpen its focus," such as determining which verticals to specialize in, he said.

For its part, Microsoft is confident that it can give ERP customers a better user experience with its technologies than any other vendor, a spokeswoman said.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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