Microsoft shores up midmarket strategy

Microsoft Wednesday plans to make a significant pitch to midmarket customers, including the introduction of new products.

Microsoft is expected to reveal new products for midmarket customers and more details of Project Green, its long-term plan for its financial applications portfolio, at a conference for small and medium-size business customers.

The vendor also will articulate a new strategy for mid-sized businesses called Together, We Build Business. Microsoft CEO, Steve Ballmer, will send out an email to Microsoft's midmarket business customers outlining the strategy and the new products that will be unveiled at the show.

One of those products is a new midmarket server product code-named Centro, which is based on the future release of the Longhorn version of Windows Server. Longhorn, the code-name for the next version of Microsoft's Windows Server operating system (OS), is scheduled to ship in 2007, after which Centro will be made available.

Microsoft defines a midmarket customer as anyone with 25 to 500 connected PCs.

The software giant also would unveil the official name for the products that fell under Project Green, a two-phased plan to unify Microsoft's various business applications on one code base, senior vice-president of Microsoft's Small and Midmarket Solutions & Partner Group business unit, and chief operating officer for Microsoft Business Solutions, Orlando Ayala, said.

The next versions of the product families that were part of Project Green, including Axapta, Great Plains, Solomon and Navision, would be rebranded Dynamics, Ayala said.

At Microsoft's partner conference in Minneapolis in July, senior vice-president of Microsoft Business Solutions, Doug Burgum, said in an interview that Microsoft's strategy for Project Green was to more tightly integrate Microsoft's various business applications instead of letting customers suffer integrating the products themselves. This was especially important for Microsoft's business applications portfolio, which were a set of applications mostly acquired from other companies - that had some overlapping functionality but also served different customer needs.

Indeed, unifying some of these products on a common code base and a common brand was not only good for Microsoft's customers and partners, but also for the company itself, a lead analyst with research firm Directions on Microsoft, Chris Alliegro, said.

The overlap in functionality of some of the products meant you had R&D teams at Microsoft being paid to work on similar features, he said. This situation was causing Microsoft to have "an inefficient R&D cost structure" in its business solutions group, a situation that could be eliminated if the company's vision for Project Green pans out, Alliegro said.

"It certainly makes sense to have if not one, then fewer teams working on similar product sets," he said.

Ayala said that Microsoft's overall marketing plan for mid-sized companies reflected the kind of product integration being undertaken through Project Green.

He said Microsoft aimed to bring its products closer together in ways that would solve the complex IT problems midmarket customers often face, in an effort to make it easier for them to deploy a more simplified IT infrastructure.

IT professionals at mid-sized companies face a difficult task, because while the needs of their companies were complex, their IT budgets and departments were often limited in resources, Ayala said.

"The most unhappy people in the IT world are the IT specialists in the midmarket," he said. "They have very few (resources) and they have to compete with big companies. We know there is a lot of pain in this space that we can solve."

Microsoft isn't the only company trying to woo midmarket customers. IBM, Oracle and SAP also are gunning for mid-sized business customers, a fact Ayala acknowledged.

"Everyone is rushing into this space," he said.

However, Ayala said that the midmarket was the fastest-growing customer segment for Microsoft, which had double-digit growth in the midmarket during the last fiscal year. He would not disclose specific figures for any gains Microsoft has made in the segment.

As part of its midmarket focus, Microsoft also will give customers one licensing model, a plan that it disclosed in July at its partner conference. Back then, Microsoft announced it was streamlining its Open License Value program, changing the name to simply Open Value and making the new program worldwide, eliminating different iterations of the previous program that existed in different countries.

Ballmer would also outline more of Microsoft's plan to leverage its partner community to reach vertical customers that served the midmarket, Ayala said.

Microsoft has been pushing its independent software vendor (ISV) and consulting and services partners to deliver products and services tailored to vertical customers, a plan that has been met with mixed reactions from its partner community.

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Elizabeth Montalbano

IDG News Service
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