Microsoft's been dabbling with on-demand software services for awhile, but the general availability of Microsoft Dynamics CRM Online, beginning Tuesday, marks its most significant effort yet to provide the market with an alternative to Salesforce.com.

The software service for managing a business's customer contacts, sales information, and marketing efforts is available as a subscription and hosted from Microsoft's data centers using a multitenant architecture. General availability follows months of testing by 500 Microsoft customers.

Microsoft is trying to beat Salesforce.com on price and storage options. The base version, called Professional, costs $44 per month per user following a one-year introductory rate of $39 per month. That includes 5 GB of data storage per organization and the ability to customize workflows. The Professional Plus version costs $59 per user per month with 20 GB of storage, with more customization features and the ability to synchronize data contained in other systems with the service. Users access the service using Microsoft Outlook or a Web browser as an interface.

By comparison, Salesforce.com's Professional edition starts at $65 per month per user and comes with 1 GB storage per organization; additional storage costs extra. While many small or midsize businesses won't even need the minimum of 5 GB of storage offered by Microsoft, "this goes back to our strategy to create a new price-to-value equation," said Bill Patterson, group product manager of Dynamics CRM.

Salesforce.com has long argued that Dynamics CRM -- previously only available as an online subscription through resellers (called Dynamics CRM Live) or as a licensed, on-premise software application -- lacks features and functionality offered in its online software. Research firm Gartner ranked Salesfore.com as a leader in its magic quadrant for Salesforce Automation last year, a status it shared only with Oracle Siebel CRM, while Dynamics CRM was ranked as a challenger.

While Dynamics CRM may appeal to Microsoft-centric companies, it lacks some "best-of-breed" functionality and "proof points" that it can integrate well with companies' SAP and Oracle ERP systems, according to Gartner. That report was based on the analysis of Microsoft's software prior to an upgrade, Dynamics CRM 4.0, that became generally available in January.

Microsoft's Patterson argues the company trumps Salesforce.com on some features. Its Professional version, for example, offers 100 custom entities -- or objects for defining custom data forms, views, and attributes -- and 100 custom workflows, while Professional Plus provides 200 custom entities and 200 workflows. "By comparison, Salesforce.com gives you 50 custom entities and no custom workflows" for the Professional edition, he said. Salesforce.com does offer custom workflows in its Enterprise and Unlimited Editions, starting at $125 per user per month.