Microsoft confirms Dynamics strategy

Microsoft emphasised its new strategy of targeting the goldmine small-to-medium bus-iness (SMB) market, by anno-uncing new products tailored to the sector this month as well as a re-branding of its Business Solutions arm.

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By  Chris Whyatt Published  September 18, 2005

Microsoft emphasised its new strategy of targeting the goldmine small-to-medium business (SMB) market, by anno-uncing new products tailored to the sector this month as well as a re-branding of its Business Solutions arm. At a hectic product launch event and conference for midsize firms at the companies Redmond, WA headquarters on September 7, the IT giant unveiled its plans to get closer to the market segment over the coming year, and told attendees it can be a large source of sales growth for the company. “I see great opportunity for revenue growth coming from mid-market customers,” Steve Ballmer, Microsoft CEO, told the audience, which included more than 500 employees of midsize firms. Ballmer explained that he had spent more time trying to understand this market segment than any other during his time at Microsoft. “It takes a little more work to understand it than the consumer or enterprise markets,” he said. Despite its dominance and reputation in the consumer and enterprise markets, Microsoft executives admitted the SMB market segment remains the most elusive. In a bid to rectify that situation it has developed a multi-pronged assault including:a new line of business applications, Microsoft Dynamics; a new infrastructure solution aimed at targeting the segment, code-named ‘Centro’; and fresh, targeted software additions under its Office platform. All this is aimed at meeting the ‘unique’ needs of SMBs. “You’re lucky if you know their name and what they bought… The mid-market you have to connect to,” Ballmer confessed. Of course, Microsoft is hardly unique in facing this problem: most of the large enterprise software firms have struggled to reach the mid-market, with the most common complaint being that they just offer slimmed-down or re-packaged versions of their flagship products for that segment. Microsoft is hoping to get around this with a package of software tailor-made for the mid-market. Code-named ‘Centro’, the new infrastructure solution will combine the Windows Server operating system with the Exchange e-mail server and various management tools. However, mid-sized companies may be advised not to hold their breath: the new software will be based on the Longhorn server, which isn’t expected to debut until 2007 at the earliest. Microsoft also announced the rebranding of several of its Microsoft Business Solutions products – now under the umbrella of the new “Dynamics” range. The Business Solutions division lost over US$200million during the last financial year (on sales of just over US$800million) and this move looks to be a face- and revenue- saver. Microsoft also launched two new, specifically targeted software products, which work in harmony with the existing Microsoft office platform — Small Business Accounting 2006 and Small Business Management 2006. “These solutions were built from the ground up to support the ways that small businesses actually work, and to be incredibly easy for employees to implement and use,“ said Microsoft chairman Bill Gates of the products, speaking at the same event. He said the company plans to release a mid-market version of its Windows server in 2007-08.

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