At Microsoft Corp’s mid-market Business Summit earlier this week, CEO Steve Ballmer suggested that Microsoft is going to go the same way as SAP and Siebel by performing an about-face and launching hosted offerings.
We do believe that there will be a set of services that our mid-market customers, and small [customers] will be interested in using and running, he said. He went on to suggest that anti-virus and anti-spam software services are examples. You will see us respond and address those needs, along with [providing] a variety of other services that we will announce over the next 12 months, he said.
Hosted software is more closely associated with CRM due to Salesforce.com’s runaway success, and although Ballmer made no direct reference to hosted CRM plans, he did say the company would provide details when appropriate. He believes there will be a balance between hosted and on-site software. We are absolutely working very hard. We expect to give Salesforce.com a run for its money by having hosted and on-premises solutions, he said.
Hosting is not an unknown concept for Microsoft because some of its partners already offer a hosted service around its CRM application, and applications designed for the .NET framework can be run in hosted mode, but Microsoft has always insisted that there is little call for this deployment model, despite Salesforce.com signing up 308,000 subscribers and 17,000 customers.
Salesforce.com was gleeful in the face of Microsoft’s comments. Microsoft’s failed enterprise software strategy has let the industry down. We have competed against them in the CRM market since 2002, and they have failed to deliver a competitive product, said Marc Benioff, chairman and CEO of Salesforce.com. They just cancelled version-two of their product and skipped ahead to three. In the meantime, we are on the 18th generation of our service in just six years. Customers are tired of waiting for Microsoft to innovate.
Salesforce.com is not alone in successfully building a business around web-based application services. Companies like RightNow, Salesnet, and NetSuite are all undergoing extraordinary growth.
Where they were considered small upstarts, the hosted approach has gained acceptance as a legitimate software model, and the vendors are gaining market share and threatening the traditional players. As a result, Siebel has a major on-demand initiative, and SAP has announced it will launch a hosted CRM service for the high-end enterprise areas of the market. Oracle has a low-key on-demand service for its flagship suite with about 200 customers on board. Now Microsoft has indicated it will join the fray.