But Can Microsoft Execute

By John Pallatto  |  Posted 2005-11-10 Print this article Print

on Its Plan, Competitors Wonder?"> Ozzies memo contains a lot of good ideas, but they are mostly five year old ideas that already are being implemented by other companies, said Denis Pombriant, principal analyst with of Beagle Research Group, a CRM market research firm in Stoughton, Mass. "Some of what Ray Ozzie writes about, like the seamless OS, seems like a page right out of Salesforce.coms" business plan Pombriant said.
"Generally all of the ideas about seamlessness are good and important," he said. "He is right that products need to just work. People are just tired of one device that doesnt work with another; or having to dump a lot of brain cells into figuring out how to make data flow between your PC and your PDA," said Pombriant.
Now the question is whether Microsoft is going deliver innovative products that solve these problems, he said. "But we used to look at Microsoft as an innovation hub. What we have gotten from them over the last month or two is that they have become big followers and in some cases they are playing catch up," said Pombriant. It remains to be seen if Microsoft wealth in money and development talent will make it a leader in the field of software as a service, he said. "If catching up is a matter of throwing money at the problem they will be able to do it," Pombriant said. However, Microsofts competitors in the on-demand software services sector question whether the software giant will demonstrate the level of agility and flexibility that Ozzies memo calls for. "Companies like Microsoft have plenty of cash, and arguably some of the most beautiful minds in the business working for them," said Marc Benioff, CEO of Salesforce.com, a fast-growing provider of on-demand CRM services based in San Francisco. "But Microsofts business is not tuned to the realities of a new world that is not based on two- and three-year upgrade cycles and lucrative maintenance contracts," Benioff said. Microsoft may find itself struggling for relevance in the online software services era, just as mainframe software companies struggled to stay alive when enterprises started shifting to PC-based client/server software products, he said. Click here to read more about Microsofts Web services.

Microsoft will likely find that it is harder for it to catch up in the on-demand business application market than it was in the browser business, said Zach Nelson, CEO of NetSuite Inc., which markets a suite of hosted CRM, order fulfillment, inventory management and finance applications. "As far as software as a service goes, they are in a pretty tough situation because they have a lot of catching up to do," he said. Nelson contended that aside from its Outlook messaging application, building enterprise business applications is not Microsofts strong point, noting that it bought the accounting, finance and enterprise resource planning applications development by Great Plains Software, Navision and Axapta. Microsoft CRM is homegrown, but that has yet to prove a success in the market, said Nelson. Read more here about NetSuite CRM. "Unfortunately it is probably six years after they should have gotten religion" about the importance of software as a service, Nelson said. NetSuite has spent most of the past six years developing its application services. Even with all of its resources Microsoft will find it isnt easy to develop a comparable application suite from scratch, he said. Editors note: This story was updated to include the comments of Denis Pombriant, Beagle Research Group principal analyst. Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.

John Pallatto John Pallatto is eWEEK.com's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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