Microsoft CRM moves under the microscope
Published: 17 Apr 2002 12:01 BST
Microsoft's long-anticipated entry into the CRM niche, announced in February, put it in direct competition with Onyx, Pivotal, and other software companies targeting small businesses.
So far, Onyx and Pivotal have said the entrance of the software giant just proves there's enough market demand for many companies to profit. However, if history holds, Microsoft is also likely to expand its strategy beyond current plans to cater to small businesses and take on Siebel Systems, SAP and Oracle in the more profitable area of selling CRM to large businesses.
"Microsoft...will inevitably move upstream. That's how the market works," said Joshua Greenbaum, an analyst with Enterprise Applications Consulting.
The reason Microsoft has to enter the business applications market and build an ever-larger and more enterprise-ready set of technologies is simple, according to analysts: The company needs to enter new software markets to increase its revenue.
Microsoft has a lock on desktop business software with its collection of Office applications, which controls more than 90 percent of the market. Office accounts for more than a third of Microsoft's overall revenue.
But the desktop application market is starting to mature, meaning Microsoft is looking for new areas of growth. And CRM is one of the few growth areas in the business software market. Research firm Meta Group expects the market for CRM software to more than double from $20 billion in 2001 to $46 billion in 2003.
"I think what Microsoft is doing in the enterprise software market is something they should have been doing a long time ago," Greenbaum said.
According to Greenbaum, it's inevitable that Microsoft will extend its reach and one day compete with the likes of CRM market leader Siebel because the potential profits are so great.
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