Eight months ago, Microsoft VP Orlando Ayala testified during the Oracle antitrust trial that selling enterprise software had turned out to be a "humbling experience
" for Microsoft. The latest news out of Redmond indicates that Microsoft is still learning from that experience.
In the quarterly earnings call last week, CFO John Conners said that Microsoft Business Solutions (its ERP business unit) lost $29 million in the most recent quarter, compared to a loss of $139 million a year ago. The unit has never been profitable since its start four years ago.
There's more. Microsoft has also quietly indicated that the release date for a major upgrade of its Axapta ERP system, V4.0, will be deferred until 2006. Microsoft's stated reason is to add more functionality and integration with Microsoft technology, such as Biztalk, SQL server, and Sharepoint.
And in another sign of trouble, Conners said that some Microsoft ERP offerings would be moved to "maintenance mode." Although Conners refused to name the products that are being sidelined, it's a safe bet that Microsoft's Solomon product is one of them. Microsoft has already shuttered Solomon's headquarters and has outsourced product development and support to a third-party.
When Microsoft first entered the ERP space, with its acquisition of Great Plains, everyone predicted that Microsoft would quickly dominate the market. I recall a lot of commentary along the lines of, "Microsoft dominates every market that it goes after. Look at Netscape."
You don't hear that sort of talk much anymore, at least not concerning Microsoft's ERP offerings.
I do not mean to imply that Microsoft's enterprise software offerings are bad products. They are good products, and I continue to recommend them to clients. Because of Microsoft's commitment to this market, and its nearly unlimited resources, Microsoft products are generally a safe bet. I just don't think that Microsoft will dominate the business applications market the way it has dominated the market for desktop software.
Mary Jo Foley at Microsoft Watch
has the scoop on the latest developments at Microsoft Business Solutions. Related postsMicrosoft: selling enterprise software is a "humbling experience"First look at Microsoft's Axapta ERP systemIs Microsoft upstaging Great Plains, Solomon, Navision, and Axapta with "Project Green"?Microsoft Project Green details emergingYet another update on Project GreenFeedback regarding Microsoft's Project GreenMicrosoft Longhorn cutbacks threaten Project Green