By Mike Ricciuti
Wednesday, December 07 2005 09:46 AM
URL: http://www.zdnetasia.com/news/software/0,39044164,39296506,00.htm

Microsoft has launched a long-awaited update to its customer relationship management software, which will for the first time include subscription-style pricing.

Dynamics CRM 3.0, released late Monday, lets companies track and manage customer information. It also adds marketing management and service scheduling capabilities, along with tight integration with Microsoft's Office desktop software, said Brad Wilson, general manager of Microsoft's CRM product line.

The new release, roughly two years in the making, also introduces a hosted version that Microsoft's partners will offer as a service over the Web. Microsoft will continue to sell a traditional version of the software that customers install on their own servers.

Competitors in the CRM market, such as Salesforce.com and Siebel Systems, which database giant Oracle plans to acquire, already offer hosted CRM. Industry giant SAP has yet to introduce a hosted version of its products.

Microsoft said that with the updated software, it's also targeting larger companies with a new professional edition. That move will put the company in direct competition with SAP and Oracle.

The hosted version of Microsoft's product, which will be priced by partners, requires no up-front contract, Wilson said. Customers "pay for as much CRM as they use in a hosted environment for as long as they want to use it," he said. Microsoft charges partners a base monthly fee. The hosted version will be available to partners in January, Microsoft said.

Wilson expects hosted prices to vary depending on the amount of customization done by partners for particular regions and industries, such as financial services.

The software will be available in two versions. The professional edition is targeted at large businesses, costing US$622 to US$880 per user and US$1,244 to US$1,761 per server. The small business edition is limited to 75 users and costs US$440 to US$499 per user and US$528 to US$599 per server.

Despite the company's big plans, Microsoft does face an uphill battle against entrenched rivals.

SAP dominates the CRM market, with more than US$1.6 billion in sales in 2004, according to AMR Research. SAP's sales of CRM tools are expected to reach US$1.7 billion this year. Microsoft, by contrast, sold US$202 million worth of CRM software in 2004 and is expected to sell US$232 million worth this year, AMR said.