Josh Greenbaum is pointing me to his article in Datamation
last week, where he speculates that Microsoft Business Solutions (MBS), the unit that sells Great Plains, Axapta, Navision, and Solomon, is doing so badly that Microsoft might want to actually unload it.
At a minimum there's a lot of egg on Redmond's face about this multibillion-dollar white elephant called MBS. It's the second-smallest business unit in the family -- only mobile devices is smaller -- and it's raking in the biggest losses. At least the losses slowed down a little last year: MBS only dropped $70 million in the second half of 2004, compared to a $193 million loss in the second half of 2003. Revenues are growing, though the year-to-year growth in the last quarter of 2004 was less that one-half of one percent.
Beyond the dismal financial results, Josh relates a string of bad news for Microsoft: the new version of Axapta looks to be a year behind schedule; the next generation rewrite of the four main applications, Project Green, has been delayed; Microsoft had no viable offer for PeopleSoft customers
; and, there are conflicts and consolidation issues among its resellers. He concludes,
At a certain point one begins to feel sorry for the MBS gang. I'm sure they mean well, and I know from my contacts in Denmark that Axapta and Navision are great products. But one really has to wonder how long Microsoft will keep plugging away at something that is clearly outside its core competence. That's why I keep thinking they're going to sell the business and get back to their knitting.
Josh wonders whether Microsoft's threshold for pain is high enough to sustain itself through these tough times, or whether it will prefer to unload the entire business. I say that Microsoft sticks it out, because it needs the presence in the applications market to pull through sales of its operating systems, database, tools, and infrastructure technologies. Microsoft can afford to throw money at the product problems, which I think it will eventually overcome.
But the problems in the reseller channel will be more difficult, because Microsoft is not entirely in control there. As I have pointed out in the past, the secret of enterprise system sales in the small and mid-market is the reseller channel, and there are simply not that many really good resellers out there. A month ago I would have said that Microsoft had a good shot at picking up some of the J.D. Edwards partners; but it now appears that, wisely, Oracle is going to strengthen the JDE channel
, not eliminate it. So, Microsoft is going to have to continue to compete for resellers with Oracle, SAP, Lawson, Epicor, QAD, Infor, and every other vendor that is targeting the mid-market. It won't be easy. Related postsIs Microsoft dying?Microsoft wants PeopleSoft customers but doesn't have much to offerMicrosoft eats more humble pie in enterprise software businessMicrosoft: selling enterprise software is a "humbling experience"Microsoft Longhorn cutbacks threaten Project GreenMicrosoft Business Solutions is setting the stage for big-time channel conflict among resellersOracle's new reseller strategy and speculation on the future of JDEClash of the titans
(regarding battle between SAP and Microsoft for resellers)