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Ending industry speculation about a pending deal,
Microsoft announced it will acquire
Navision, a Danish
software vendor, in what is the Redmond,
Washington-based conglomerate's second largest acquisition.
Assuming final regulatory approval is granted. the deal — valued
at US$1.3 billion — is expected to extend
Microsoft's market share throughout Europe.
The rationale behind the
acquisition has been to enlarge the markets of two companies that offered
complementary products, but were very different in terms of geographic reach,
David Thacher, general manager of
global CRM for Microsoft, told CRMDaily.com.
Navision includes CRM products and tools as part of its business applications.
For its part,
Microsoft is set to release a small and mid-market CRM application later
this year.
Staying on Top
Once the acquisition is complete,
Navision will become part of
Microsoft's Business Solutions division.
Navision's
corporate headquarters in Vedbaek,
Denmark, will become the center of development and operations for
Microsoft in
Europe, the
Middle East and
Africa — the largest product development center
Microsoft has outside the United States, the company said.
This deal is
Microsoft's second largest, topping even the purchase of Great Plains.
Microsoft's biggest purchase was Visio, a software graphics company.
European Footprint
The driving factor behind the acquisition is
expanding market share in Europe.
"Navision
has an incredible partner channel in
Europe," Thacher said. "They can provide us with an excellent foundation
to bring our CRM product into this market."
Currently,
Microsoft derives 80 percent of its business applications revenue from
the United States, he said. By contrast,
Navision gets 86 percent of its applications revenue from Europe.
"I would characterize the
Navision move as a smart strategic move for
Microsoft," Pivotal CEO Bo Manning told CRMDaily. For all practical
purposes, Navision is the 'Great Plains' of Europe. Its bread and butter
are tens of thousands of small businesses that primarily use their accounting
software."
Through the CRM Door
The acquisition will, no doubt, further increase rampant industry
speculation about the size and shape of the CRM market, once
Microsoft enters with its application.
In February, the company announced it would be releasing a CRM
application, its first since acquiring Great Plains. It is also the first
Microsoft application built on
.NET.
Many have wondered if
Microsoft has been positioning itself to dominate the CRM market place.
Corporate executives have countered that the company's focus is firmly fixed
on the small and mid-size market.
That
CRM market has hardly been penetrated, Thacher said.
"Existing
solutions haven't been scaled properly and do not have many channels
to offer support. This will be a fun market for us to ride," he added.
Other industry watchers second this view of
Microsoft's CRM game plan. "They have been clear about their strategic
intent from the beginning," Manning said.
According to Thacher, development for
Microsoft's CRM application is on track. "We rolled out several phases
of alphas, and at the end of the month we are rolling out
betas and training."
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