Microsoft's CRM Live: Two versions coming, but not until 2008
Microsoft is expected to try to use cut-rate pricing to compete with Salesforce.com and other software-as-a-service (SaaS) players when it finally launches its Dynamics CRM Live service in 2008.
Context & Ripple Effects
The CRM Live news lands on the same day Microsoft confirmed its February 27, 2008 triple-play launch of Windows Server 2008, Visual Studio 2008 and SQL Server 2008 — so the company is staging 2008 as both an on-premise wave and, per reports that remain unconfirmed, its first serious hosted-CRM push. The two-version plan and the cut-rate pricing against Salesforce.com are characterized in coverage as expectations, not announced facts.
The story traveled quickly: eWEEK framed it around Microsoft pitching a software-plus-services model to partners, while the Seattle Post-Intelligencer led with pricing that would undercut Salesforce.com — signaling that the competitive angle, not the product details, is what resonated.
First-order effects
- Salesforce.com faces a deep-pocketed entrant reportedly prepared to price below it, putting pressure on its per-seat economics even before CRM Live ships.
- Microsoft partners hear a software-plus-services pitch at the July 10 conference, forcing them to plan for a world where Dynamics exists as both licensed software and a hosted service.
Second-order effects
- A two-version Dynamics lineup creates channel tension for Microsoft: partners selling on-premise Dynamics CRM must defend value against Microsoft's own cheaper hosted tier.
- Other SaaS CRM vendors beyond Salesforce.com would face downward price pressure if Microsoft's reported undercut becomes real pricing.
Third-order effects
- If the pattern holds, hosted CRM shifts from a specialist market Salesforce.com defined toward a scale game where large platform vendors use bundling and aggressive pricing to buy share.
- The software-plus-services framing points toward hybrid delivery becoming the default expectation for business applications, eroding the pure on-premise license model Microsoft built Dynamics on.
The trend: Packaged-software incumbents are answering SaaS specialists like Salesforce.com with hosted editions of their own products, priced to compete rather than to protect existing license margins.