Microsoft counters SAP with Axapta price cut

A few months ago, Microsoft and SAP were talking about a merger. This month, they are fighting each other for market share. It appears that SAP, with its SAP Business One and All-in-One program targeted at small and mid-size companies respectively, has had some success in taking deals in Germany away from Microsoft, specifically those involving its higher end Axapta ERP offering. (Unlike in the U.S., Axapta has always had a strong presence in the European market and has been competing with SAP there for years.)

Quoted in an AFX News article, Michael Kleinemeier, head of SAP's German operation said,

"We have increased our total number of clients in this space by 40 to 50 percent," Kleinemeier said. He said that about 500 small businesses now use SAP's Business One software package and 2,000 mid-sized businesses use its All-in-One program. As a result, SAP is out in front of rival Microsoft and its "Microsoft Business Solutions" product.

In response, Microsoft is reportedly cutting the price of Axapta by 12% in order to hold ground against SAP.

It would not surprise me to see Microsoft make similar price cuts in the U.S., if it hasn't done so already. Microsoft can certainly afford to do it, and it would put pressure on all the major players, including SAP, Oracle, and PeopleSoft, at a time when they are trying to hold the line on revenue and earnings numbers.

A price war would be good news for buyers.

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