Microsoft Changes Strategy, Starts Targeting Big Business Accounts

Add Microsoft to the field of competitors looking to be the business software vendor of choice for large companies. The world’s largest software maker has now conceded that it is interested in breaking into the market dominated by SAP, Oracle and PeopleSoft.

Microsoft’s move puts it in direct competition with Oracle for payroll and accounting software clients. Oracle is in the midst of attempting a $6.3 billion hostile take over of rival PeopleSoft.

"This will be a head-on collision with Oracle, you bet," Orlando Ayala, a Microsoft senior vice president who runs sales to small and mid-sized companies, told Bloomberg News. "They are moving down to smaller customers, and we are moving up."

The Redmond, WA-based Microsoft’s move could actually help Oracle’s anti-trust case in the PeopleSoft takeover bid, which is pending.

"That statement could be highly significant," Bob Lande, an antitrust professor at the University of Baltimore Law School, told Bloomberg. "The government can't just take Oracle's word for it when it says there's a giant entering our market. But if the giant says, 'Yeah, I am going to enter the market,' you have to take it a lot more seriously."

In the past Microsoft has confined its interest to smaller and medium-sized businesses, a sector analysts see as the best bet for growth. However, Microsoft has expanded its sales force and is targeting segments of companies such as Ford Motor Co. and General Motors Corp., Ayala told Bloomberg.

"Microsoft can be successful in divisions of large companies, but I don't think you will see a Fortune 500 company ripping out an Oracle or SAP financial system and putting in a Microsoft one," said Brad Reback, an analyst at CIBC World Markets, who rates Microsoft shares "outperform."

Ayala conceded that he doesn’t expect that large companies will make a sudden shift to Microsoft products. For now, he hopes to see an infiltration of sorts by targeting subsidiaries and divisions. He doesn’t rule out a further shift in strategy down the road.

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