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Microsoft gets CRM sales machine humming

The company says it has sold its customer relationship management applications to 1,000 businesses--a "milestone" for the 1.0 version it introduced in January.

Microsoft has sold its customer relationship management applications to 1,000 businesses, which it considers a "milestone" for the 1.0 version it introduced in January.

The company discussed its progress in the customer relationship management (CRM) software market on Thursday at its global partner conference in New Orleans. The introduction of the software, a set of sales and marketing programs, was Microsoft's entry into an already crowded market featuring Best Software, Epiphany, FrontRange, Onyx Software, PeopleSoft, SAP and Siebel Systems.

With more than 1,500 resellers enlisted to sell its CRM wares, Microsoft seems to have overcome concern over initial complaints about the applications, such as a feature that some customers worried would cause their e-mail messages to be confused with spam.

Microsoft said the software is designed for companies with fewer than 500 employees, but it listed some big-name customers in Thursday's announcement. Among them are H&R Block Financial Advisors, a 1,900-staff subsidiary of H&R Block, and Schwan Food Company, a frozen-food company with more than 24,000 employees.

One hurdle Microsoft faces in reaching smaller businesses is that its full-featured CRM programs require customers to also purchase its Windows Server operating system and database server software. A Microsoft executive recently said that only one-fifth of small companies own a server.

"People don't want more Microsoft software shoved down their throats," said Marc Benioff, chief executive of CRM competitor

Nonetheless, Microsoft's CRM splash appears to have made some waves among competitors that initially rebuffed the threat the software giant posed as a rival--at least publicly. CRM software maker Pivotal, which reported $56 million in revenue in its 2003 fiscal year, said Thursday that it agreed to be acquired by a venture capital firm for $48 million and would merge with another software company.

Microsoft's moves also may have put CRM rivals SAP and Siebel on the defense. Siebel unveiled a plan last week to target small and midsize companies with a cheaper version of its software available online called Siebel CRM OnDemand. SAP is gearing up for a small-business initiative called All-In-One, a set of software programs for companies with less than $1 billion in annual revenue.

Microsoft plans to release a new version of its applications, CRM 1.2, by the end of the year. That release will mark the international launch of the product, which will be available in nine languages, the company said.