Just as the Zune lags behind the iPod, Microsoft CRM won't win on price, CEO Marc Benioff argues.
Microsoft on Tuesday provided some details of CRM Live, a new software-as-a-service offering that it'll price at about half of what market leader Salesforce.com charges. Salesforce CEO Marc Benioff, however, shows no signs of shaking in his boots.
Benioff said Microsoft customers are already paying prices similar to what Microsoft announced today for hosted CRM software through partners. "These 'new' prices are their market prices today -- there is no difference," said Benioff in an e-mail interview. "When you have an inferior product you have to have an inferior price. That is why Zune is priced below iPod. And why Windows CE is priced below BlackBerry. And why Microsoft CRM is priced below Salesforce.com."
Microsoft said its Enterprise Edition of CRM Live, due out later this year, will be priced at $59 per user per month, about half the industry average, while the Professional Edition will list for $44 per user per month and available at the promotional price of $39 per user per month in 2008.
Microsoft isn't really new to the software-as-a-service (SaaS) market; its customers already can pay monthly fees for Microsoft Dynamics CRM hosted by partners. Microsoft said that CRM Live, to be hosted from a Microsoft data center in Virginia, will likely cost customers less than what they're paying for partner-hosted CRM. But Benioff and Bruce Francis, Salesforce's VP of corporate strategy, say the pricing Microsoft is advertising is similar to what companies are now paying for hosted Microsoft CRM with typical discounts. Yet those low prices haven't yet made Microsoft a major force in the market, they note.
"Microsoft CRM still lacks many of the key features customers demand today, which is why Gartner ranks them below both Salesforce and Siebel on the 2007 [Gartner] Magic Quadrant out last week," Benioff said.
True, but Gartner also notes that Salesforce.com's premium price could be a problem. In its report on the salesforce automation market, Gartner ranks Salesforce.com and Oracle Siebel CRM as market leaders. Among Salesforce.com's strengths, Gartner notes, is high customer and revenue growth, good usability, straightforward deployments, use of a services-oriented architecture, and "thought leader" on the SaaS model.
"Cautions" (apparently a nicer word for weaknesses) include high costs ranging between $125 and $195 per user per month, need for better relationships with IT organizations (many of its deals are done directly with business units), and lack of a best-of-breed vendors in its AppExchange Ecosystem.
And, as Benioff notes, Microsoft Dynamics CRM is not particularly known for the quality of its functionality. Gartner calls it a challenger, and among its strengths cites its viability as a large vendor, Microsoft Outlook integration, strong leverage of .Net and Microsoft infrastructure, and one of few vendors getting interest by large enterprises. Cautions include lack of best-of-breed functionality in some areas, not enough "proof points" for integrating with SAP(SAP) and Oracle enterprise-resource planning systems, and few implementations of more than 750 users.
informationweek.com
