Microsoft News Tracker

From this week’s SAPPHIRE conference comes the latest on Microsoft’s Duet partnership with SAP:

April 24, 2007 — SAP AG (NYSE: SAP) and Microsoft Corp. (NYSE: MSFT) today announced that they have deepened their relationship and extended their product road map for Duet™ software for Microsoft® Office and SAP, a solution that allows information workers to interact with select SAP business processes and data through Microsoft Office applications. The companies will jointly enhance Duet with additional business scenarios, platform capabilities and development tools. The upcoming version, Duet 2.0, is planned for the end of 2008 and Duet 3.0 is planned to be released soon after the next generation of SAP® Business Suite applications and Microsoft Office software, including Microsoft Office SharePoint® Server. This announcement from SAP and Microsoft underscores the companies’ continued investment in shaping the future of Duet to ensure that it benefits their joint customers.
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Following are some new features customers can expect in Duet 2.0 and Duet 3.0:

• Enhanced and new business scenario support for sales and supply chain management, and other business scenarios — extended capabilities will allow sales professionals to manage sales leads and opportunities within SAP® Customer Relationship Management (SAP CRM) from Microsoft Office. Additionally, supply chain managers will have new capabilities for purchasing and legal contract management. There will also be support for selected governance, risk and compliance scenarios.

• Expansion of Duet to support unstructured processes, information and team collaboration through embracing Microsoft Office SharePoint Server, Microsoft’s business productivity platform. The combination of SAP Business Suite and Microsoft Office SharePoint Server streamline the way people do business by truly connecting people, process and information.

• Enhanced Duet tools and infrastructure interwoven with Microsoft Office SharePoint Server, so customers and partners can customize existing scenarios and create new ones. New scenario templates and development tools allow organizations to adapt existing Duet scenarios and build new scenarios that meet their evolving business needs.

For more information on Duet, visit http://www.Duet.com.

Duet still rates as one of the sparse crop of “corporate alliances” that actually produced substantial product, but there are some sour notes in the harmony since Microsoft persists in competing with SAP’s core business with their Dynamics line which has its own Office connector. For now at least, the companies are papering over the cracks:

The Duet partnership had appeared somewhat strained last month when Microsoft unveiled plans to come out with Dynamics Client for Office and SharePoint, a new product to more tightly integrate its own rival Dynamics business applications with Office and its SharePoint Web portal. Microsoft, which has tended to focus more on small to midsize users, also promised to compete more aggressively in the enterprise applications space against both market leader SAP and number-two player Oracle Corp.

Microsoft executives positioned the Dynamics Client, due out in May, as “a superset” to what Microsoft and SAP currently offer with Duet. For instance, unlike Duet 1.0, the Dynamics Client will provide Microsoft’s customers and partners with access rights to information and processes managed by Dynamics so they can customize and build their own Office business applications.
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During Tuesday’s press conference, SAP and Microsoft executives were keen to stress their ongoing commitment to Duet and limit their likely competitive clashes. The two vendors remain “good friends,” according to SAP CEO Henning Kagermann. “Every so often we’ll meet in the market and will act as fair competitors,” Apotheker added.

It will be interesting to see how well that works out.

When the first reports surfaced last week that a number of big name IT companies (including Microsoft) had participated in widespread kickbacks on US government contracts, it wasn’t clear to me exactly how Microsoft was allegedly involved. Today, the details are a little clearer in Lorraine Woellert’s report at Business Week. First the big picture:

With some big players already named in lawsuits alleging a widespread kickback scheme, the information technology industry will see further scrutiny as federal prosecutors pursue additional charges in coming weeks. Last week, the Justice Dept. filed civil charges against Hewlett-Packard (HPQ), Sun Microsystems (SUNW), Accenture (ACN), and Accenture subsidiary Proquire as part of a two-year investigation involving potentially billions of dollars in government procurement projects.

The Justice Dept. unsealed complaints Apr. 19 in U.S. District Court for the Eastern District of Arkansas in Little Rock, charging the four companies with fraud and conspiracy in their attempts to win lucrative government contracts. Prosecutors also made public six whistleblower lawsuits that had been filed under seal in September, 2004, by former Accenture employee Norman Rille and Neal Roberts, a onetime partner with Deloitte & Touche who has investigated alliances between technology vendors.

The lawsuits accuse at least a dozen technology vendors of operating rebate and commission programs, referral systems, and strategic alliances that they kept secret from the government agencies that bought their systems or followed their advice. The practice has been going on in some cases for a decade, the lawsuits claim. The Justice Dept. is seeking treble damages plus civil penalties.

There are more details in the article, but the problem is with the payment of referral fees which aren’t uncommon or illegal in many business situations, but have to be disclosed on government contracts. The way the fees were so visibly institutionalized at these companies indicates to me at least that they didn’t understand what trouble they were getting themselves into with the government. Where’s a lawyer when you need one?

As for Microsoft:

According to court documents, the original six civil cases Rille and Roberts filed will proceed against Cisco Systems (CSCO), Electronic Data Systems (EDS), SAP (SAP), Lockheed Martin (LMT), Oracle (ORCL), American Management Systems, CACI International (CAI), SeeBeyond Technology, and Dell (DELL). At least five other defendants remain cloaked under court seal, including one identified in court documents as a wholly owned subsidiary of IBM (IBM).

Boeing (BA), Raytheon (RTN), Microsoft (MSFT), SAIC (SAI), and Exostar were named in the original complaints, but the court, at the urging of prosecutors, dismissed them from the cases last week. The lawsuits themselves describe a network of relationships that reads like a Who’s Who of the nation’s biggest IT companies. Based on documents and information he received while a senior manager at Accenture, Rille claims in one of the original lawsuits, “all the major systems-integration consultants and technology vendors were and are engaged in the same kickback scheme and associated conspiracies.”

So Microsoft isn’t on the hook right now, but they and a number of other big names still seem to have a significant risk. I wonder if it will rate a footnote in tomorrow’s quarterly report?

Last week Microsoft held their Convergence 2007 soiree for their Microsoft Business Systems customers and announced a package linking Dynamics ERP to Office and the upcoming availability of Microsoft Dynamics GP 10.0, Microsoft Dynamics NAV 5.0 and Microsoft Dynamics SL 7.0.

They also trotted out CEO Steve Ballmer to demonstrate the upcoming Microsoft Dynamics Live CRM service targeted at Oracle, SAP, and Salesforce.com. You may recall that it has a rather checkered history involving Microsoft competing with partners for the hosting business.

I wish I could get more excited about the MBS family of products which were all solid if unexciting businesses until Microsoft took them over, at which point they settled into mostly profit-free lassitude despite promises of a grand convergence via Project Green. Now, we can’t even tell how they’re doing since they have been folded into the Windows Business Division (i.e. Office), but it is hard to believe that it is much better.

While Steve Ballmer may be excited about competing with long time partner SAP and the others (see also Barbara Darrow’s report), a relevant question is why they don’t just spin MBS off when it would likely be better for both parties.

Some of the “smaller” Microsoft stories of the week that didn’t find a post of their own:

Microsoft Breaks Patch Records:

Microsoft has already put out as many critical alerts this year as it did in 2004 and 2005 combined–and the year isn’t anywhere near over.

And one of the bugs patched by Microsoft last Tuesday was a beaut:

It affects all currently supported versions of Windows, can be exploited without end users needing to do anything, and according to some security watchers, rivals the bug that led to 2003’s destructive MSBlast attack.
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Wednesday, Department of Homeland Defense (DHS) called out a rare warning, and Microsoft acknowledged that the patch should be at the top of every computer user’s or administrator’s to-do list.

MSBlast is often better known as MSBlaster or Blaster and its advent was quite exciting. An exploit for this latest hole has already been published.

In U.K., online advertising overtakes magazines:

Online advertising in the United Kingdom raked in $2.48 billion last year and is now worth three times the U.K. radio-advertising market, Ofcom’s annual report into the communications market has revealed.

Now the fourth-largest display advertising medium in the U.K. behind newspapers, television and direct mail, online outstripped outdoor advertising in 2005, as well as the business and consumer magazine markets.

The situation was described Thursday as “almost unthinkable, going back two years” by the regulator’s chief operating officer, Ed Richards, who said the online-advertising market was now more than a third as big as the television market.

On the subject of online ads, Steve Rubel points out that some big name advertisers want tighter auditing controls to make sure they are getting their money’s worth. Also related, Google published a paper criticizing the methodology of some click fraud auditors and they returned fire. Finally Microsoft researchers described what they have been working on to improve search accuracy and relevance at the 2006 SIGIR conference.

‘Open SOA’ launched — no surprise, no Microsoft:

Other heavyweights, such as BEA, IBM, Oracle, SAP, Sun, Tibco, Progress, and Software AG, have signed on to the advocacy group, which is spearheading two proposed SOA specifications—Service Component Architecture (SCA) and Service Data Objects (SDO)—and make the specs available to others in the industry on a “royalty free” licensing basis. SCA and SDO promise to provide a language-independent programming model for SOA.

MSFTextrememakeover analyzes the Microsoft stock buyback

Modified Xbox 360 Spreads Game Piracy and other bad news for the Xbox in Korea.

Rights Group Blasts Internet Companies Over China Policies. Human Rights Watch dings Microsoft, Google, and Yahoo. The latest is that they want the USA and EU to pass laws prohibiting companies within their purview from storing personal information on servers in China.

Microsoft appoints John Fikany as Vice President of Manufacturing Industry vertical

E-Pass patent claim against Microsoft, HP dismissed

Microsoft Unveils The Director For Halo Movie - Neill Blomkamp

Microsoft Hosts Project to Run PHP on .NET. Looks like support for more dynamic languages is coming.

Microsoft considered bundling an edition of Visual Studio Express with Vista but there were “too many snags,” among which legal problems were foremost.

Mike Ricciuti has the buzz at CNET:

Microsoft plans to launch a new hosted CRM service under its expanding Live brand next year.

Microsoft Dynamics CRM Live, a hosted alternative to its on-premise CRM software, is set to debut by mid-2007 as part of a revamped product code-named Titan.

Steve Ballmer, Microsoft’s chief executive, is expected to make the announcement here Tuesday at a conference of roughly 8,000 of its business partners.

The service, the third major category under the Live brand, joining Windows Live and Office Live, underscores Microsoft’s ambitions in the business software market. Company executives have said it could represent Microsoft’s next billion-dollar business.

Actually, I make it the fourth after Xbox Live, but who’s counting? There also already some major players like Salesforce.com, SAP, and Oracle/Siebel in the hosted CRM space as the article notes, so this isn’t going to be a pushover, but it’s yet another indication of the seriousness of Microsoft’s “Live” initiative.

Update: The announcement has taken place and the above article is now slightly different at the original source. Here’s the press release:

Building on the market success of Microsoft Dynamics™ CRM 3.0, Microsoft Corp. today announced the roadmap for the next major release of its Microsoft Dynamics CRM products, including a new software-as-a-service offering called Microsoft Dynamics CRM Live. The Microsoft® CRM Live service will be operated and managed by Microsoft within its Windows Live™ datacenters, and will offer Microsoft’s partners another fast and flexible way to address the unique customer relationship management (CRM) needs of each customer. Microsoft CRM Live will use the same code base as the on-premise and partner-hosted versions of Microsoft CRM, a strategy that reinforces Microsoft’s leadership in allowing customers to choose the best deployment option for their business and IT needs at any time. The full range of Microsoft CRM products is part of Microsoft’s vision for business — the People-Ready Business — and the new Microsoft CRM Live service will be integrated with Microsoft’s Windows Live services and Office Live services.

Microsoft confirmed that Microsoft Dynamics CRM continues to enjoy extremely rapid growth across all segments, geographic regions and industries, and has added more than 50,000 new users in the most recent quarter. The current version of Microsoft CRM is completing its international language rollout, including a May launch in China and a launch this quarter in Japan. At its Worldwide Partner Conference 2006 in Boston today, Microsoft also demonstrated a new open-source client for mobile devices that will be available in August and reconfirmed its plans to release a new Microsoft BizTalk® Server-based integration this quarter that will connect Microsoft CRM to enterprise resource planning (ERP) and CRM applications from other vendors such as Siebel Systems Inc., SAP AG and Oracle Corp.
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Microsoft Dynamics CRM Live is planned for introduction in North America in the second quarter of 2007, and will be offered as a range of service offerings on a monthly subscription basis. There is no limit to the number of users that the system can support, but it will initially be targeted primarily at small businesses, a segment that has traditionally been underserved by the lack of flexible and cost-effective CRM solutions. Early access programs that allow partners to have access to the new Microsoft CRM Live service will begin in the second half of 2006.

There’s lots of interesting grist for the mill there, but it’s still unclear if this is really a new “Live” category or just a one-off. Also, back in March Microsoft announced a hosted version of Dynamics CRM 3.0 to be “deployed by hosting partners around the world”. Now any hosting partners who took them up on it are in competition with this new offering.