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Microsoft's effect on CRM market

What will the entry of Microsoft do to the CRM market?
This is a great question but any answer will be highly speculative. Perhaps a good way to answer this is to discuss the pros and cons for Microsoft and the market.

First the pros
MS has a great deal of market power and lots of cash in the bank and as we have seen before in office automation products, databases, and online services, they have what it takes to stay with an idea until they make it profitable.

MS also has a pretty good (and getting better) partner channel full of companies that make their living customizing or otherwise adding value to their products.

Finally MS also has about 90 million (I believe) installed desktops using their Outlook product. And since the CRM product will sit on top of Outlook, that's a great installed base to sell into.

On the flip side,
There are more than a few CEOs out there that are afraid of seeing MS get any more power over their lives and who will possibly look askance at any attempt by MS to insert itself into the relationships with their customers. And to not put too fine a point on it, the company has been convicted of antitrust law violations and we are still not sure of what a settlement will look like, most importantly whether or not the company might still be broken up.

At the same time the company says it wants to launch its CRM offering into the mid-market, a group that is rather conservative both out of necessity (scarce resources) and practicality. I'd say that regardless of the merits of the product, (and we can expect the product to be fairly robust) the company has some fence mending to do to win back the confidence of the market and to ingratiate itself with a CRM market that has many options to choose from.

That said, as a practical matter a company with that much market power will undoubtedly have an impact. But CRM is a bit different from the other ventures like databases. Increasingly -- and this is especially true in the mid-market -- end users want their vendors to be solutions partners to work with them solving real business problems, and that is very different from installing a relatively static application or database and providing follow up phone support. So, my guess is that developing the software is the easy part and that developing the skill sets that go along with training, implementing and providing long term care are the less visible but more important aspects that will determine success. I also suspect that the companies MS will be going head to head with have a good lead in that department.

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