Microsoft Prices CRM Online to Undercut Rivals

With the aggressive pricing and storage options, Microsoft has ensured that companies will at least take a long, close look at Dynamics CRM Online. said Laurie McCabe, vice president with market research firm Access Markets International Partners.

Microsoft's offering could prove to be a strong competitor to Salesforce.com and other on-demand CRM products, she said. "It is very well integrated with Outlook and many people are comfortable with Outlook," so it wouldn't be that hard for companies to shift to the product, McCabe said.

"I think it will come down to 'how well it does the job for me.' I don't expect it to just suddenly turn the tide in the CRM market," she said, adding that "Salesforce has become the on-demand gold standard" in the market and it would not be quick and easy to knock it from that position.

The fact remains that Microsoft "can pour a lot of money into marketing it" and with those resources behind the product, it should do well in the market, McCabe said.

Microsoft is also making use of its partner channel, "and that can be extremely valuable. We don't want to underestimate that," she said. Furthermore Microsoft is offering to pay 10 percent of the sale up front and will continue to pay that percentage for as long as the customer keeps working with Dynamics CRM Online, McCabe said, while other online CRM providers will only pay that fee for the first year of service.

"It is not bad for partners that are already comfortable and familiar" with the Microsoft channel, she said.

The general release of Dynamics CRM Online will likely help speed up the acceptance and use of both the on-premises edition of Dynamics CRM and the online version, wrote Rob Bois, an analyst with AMR Research, in an e-mail to eWEEK.

"While Microsoft is obviously newer to the SAAS [software as a service] game, the company made a big push to engineer the Dynamics CRM 4.0 release with a multitenancy architecture that partners have already been using to host CRM for customers," Bois said.

"It's built on the exact same data model and business logic as the established on-premises product, and we see SAAS as the clear preferred delivery model for CRM today, so I expect this combination will do nothing but accelerate growth of Dynamics CRM," he wrote.

There will be customers that prefer to buy the online version of Dynamics CRM rather than the on-premises edition that Microsoft has sold for years, Bois noted.

"The real question is whether they will now prefer to do business directly with Microsoft rather than a partner. I think the Microsoft-hosted option will have broad appeal," Bois wrote. "As a customer, I would be more inclined to want to use a big trusted provider like Microsoft rather than a local reseller with a third-party hosting facility, especially if I'm looking for straight vanilla CRM," he wrote.