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Microsoft Reboots CRM, Plans Hosted Version

Microsoft is repricing and repackaging Dynamics CRM, and plans its own hosted version next year as part of its Microsoft Live initiative.
When Dynamics CRM debuts next month, it will come in two basic SKUs and will sport new pricing, CRN has learned.

With the release, Microsoft has eliminated the Standard SKU and will go with just Professional and Small Business Editions instead. Estimated retail price of CRM Professional will range from about $1,250 to $1,700 per server and about $620 to $880 per user. Separate connectors to back-end systems will cost from $8,800 to $12,500 per server, but will carry no client access license charge.

Current CRM 1.2 costs $449 per standard user and $849 per professional user, plus $1,049 per server.

And for partners wanting to host, they can do so now for just less than $25 per customer per month. That would leave room for partner margin compared with full-function Salesforce.com, which costs about $100 per user per month.

Executives at Redmond, Wash.-based declined to comment. Sources said this will all roll out in advance of a planned Dec. 1 availability target date. One partner said Microsoft has cut complexity and price. “They have listened to suggestions on packaging,” he said.

In related news, several sources confirmed that Microsoft has a “CRM Live” team working under Gary Sumner on hosted CRM. Sources inside and close to Microsoft have said the company hopes to offer its own hosted CRM next year for customers who prefer that model over partner-hosted deployment. Microsoft Business Solutions Chairman Doug Burgum declined to comment on CRM Live other than to say that the immediate focus of CRM 3.0 remains “on-premise” use. “Our product is currently the fastest growing in the on-premise market by a long measure, and with 3.0, we’re moving to solidify the top spot,” he noted.

On the other hand, “we see services as an important element, and it’s important that customers have choice. We want to be a provider of choice,” Burgum said.

The aim of the recently announced Windows Live and Office Live is to augment rich clients with Web-delivered functions, he said.

Bruce Steele, executive vice president of strategy at ePartners, Dallas, said this pricing should make it easier for ePartners-Microsoft to compete with NetSuite, Salesforce.com and SalesNet. “We face Salesforce.com in virtually every account.”

The hosted/managed services equation has proven tricky for software vendors and partners alike. “When the first ASP wave hit, we figured we’d have to sell 23 ASP deals to make the revenue of one software license sale,” Steele said. “Hosting is great for net new business, but in the first 12 to 24 months of the shift, it has a huge impact,” he added.

Regardless of the model, some partners say Dynamics CRM could boost sales.

"The new client looks very much like Outlook meaning that users can figure it out easily, but at the same time this CRM is much less reliant on Exchange [Server], so you can deploy with other mail servers," said Alan Kahn, managing director of InterDyn AKA, a New York-based partner

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