Convergence: For Ballmer, It's Still All About Office

OK, so he said a bunch of other stuff, too -- that Dynamics CRM Live (the hosted version of the software) is half the price of Salesforce.com, that Microsoft gives users a choice of whether to implement it with a strictly SaaS model or whether to install something on-premises, and that Dynamics CRM Live is (or will be when it comes out, which Ballmer says will be by the end of June) easier to customize than Salesforce.com.

But, throughout his keynote at Convergence this morning in cloudy Orlando, Fla., Ballmer kept going back to the old workhorse, Microsoft Office. Oh, he wasn't as explicit as we're being here, but he did describe the future of computing as the convergence (heh heh) of four models of computing: the Web, devices, servers...and the desktop. As in desktop software, installed on the client. As in Office, Microsoft's moneymaker.

"The future of computing is to bring together these four models," Ballmer told a Convergence crowd that looked, at least, smaller than the one that Microsoft attracted to San Diego for last year's show. "As you think about applications like Dynamics...or whatever the case may be, you don't have to think about these distinctions."

Software Plus Services, Microsoft's vision (such as it is) for SaaS, is the real star of this year's show. (Sorry, AX 2009, but you know it's true.) And the first word in Microsoft's catchphrase, software -- desktop software, specifically -- remains critical. Dynamics is supposed to be all about ease of use, which Microsoft touts as a major advantage over SAP, Siebel and other products with sometimes Byzantine interfaces. And there's nothing easier to use -- mainly due to user familiarity, not because the interfaces are actually all that great -- than Office. (Dynamics doesn't necessarily use Office interfaces per se, but the look and feel of Dynamics is very Office-like, and the integration between Dynamics applications and Office software is, as far as we can tell from demos, smooth and seamless.)

Beyond all that, there's no reason why Ballmer shouldn't tout Office and its familiar interfaces -- and their tight integration with the "role-based" interfaces of Dynamics -- as competitive advantages for Dynamics. SAP saw so much value in the Office look and feel that it worked with Microsoft to create the Duet product, which is pretty much an SAP back-end viewed through an Office front-end. Office sells; Office works -- Ballmer knows this, and users and partners know this. It's a great selling point for Dynamics.

There's just one thing: Convergence, Dynamics CRM Live and, to some extent, even the Dynamics ERP suites are all about SaaS, or at least being SaaS-capable in the case of ERP. Office, though, isn't a SaaS product. Oh, sure, there's Office Live Workspace, which sort of extends Office applications to the Web. But, if you really want Office, you've still got to load it on your PC (or, uh, Mac, we suppose).

For now, that's no big deal. Everybody has Office. Nobody minds installing it. Maybe it'll be that way forever. Or maybe this Web 2.0, all-hosted, Google Apps model really will catch on, and the model itself will be even more important than the familiarity of the user interface. If that happens, will Microsoft be ready? Will Microsoft figure out how to retool its moneymaker and shift its revenue model? What will Ballmer tout when talking about how wonderful Dynamics is?

Perhaps the shadow knows -- but Ballmer doesn't seem to. For now, though, it doesn't matter. Dynamics is a billion-dollar business, and user numbers are climbing (thanks to our old friend Josh Greenbaum of Enterprise Applications Consulting for those tidbits of information). And a major reason for that success is that Dynamics looks good and feels good to Office users. For now, that's good enough.

What's your take on Microsoft's S+S strategy? Is it too heavy on the first "S"? Sound of at [email protected].

Ballmer dropped a few other notable quotes during his speech. For one, he pledged continued support for all four of Microsoft's ERP suites as separate entities, a pledge that threw a little more dirt on the erstwhile Project Green, Microsoft's now-dead(ish) plan to converge (there's that word again) all four suites into one mega-product.

"We have a long-term view for every one of these products," the Microsoft poobah said. "We're going to adopt the same smart approaches in each of the product lines -- role-based interface, business intelligence, reporting. In terms of the specific allocation functionality of each product, they will all continue to be enhanced many years into the future."

Ballmer also threw out a few stats: more than 200 partners hosting Dynamics solutions, a growth rate for Dynamics of 20 percent per year (higher, he says, than the market in general), 4,000 users at Microsoft itself moved off of Siebel and Clarify and on to Dynamics CRM. (That last figure was accompanied by a coy quote: "Usually our people love our products in the hands of our customers more than in their own hands," followed by reassurance from Ballmer that Microsoft folks just love Dynamics CRM.)

Posted by Lee Pender on 03/12/2008 at 1:21 PM