News that Microsoft Corp discussed a merger with business software giant SAP AG of Germany has focused new attention on Microsoft's limited success in a market it would love to conquer.
Microsoft is rejiggering plans to cater to the more specialized needs of small businesses, part of a wider effort to find new revenue streams to augment its traditional cash cows. The hope is to score with accounting and other software that Microsoft is not traditionally known for. The target customer: companies with fewer than 1,000 employees.
The most recent changes -- including putting the Microsoft Business Solutions unit under the direct control of chief executive Steve Ballmer -- come as the company concedes it has not been able to beat the competition as it hoped.
Microsoft made its first big push in the market several years ago, with the US$1.1 billion acquisition of Great Plains Software Inc, a longtime player in a fragmented sector lacking a dominant leader. Microsoft believes the market includes as many as 40 million companies worldwide.
Now the segment is more important because Microsoft's big moneymakers -- the Windows operating system and Office software -- have grown so dominant that their respective markets are getting saturated. Microsoft's stock price has remained relatively flat in recent years.
Chris Alliegro, lead analyst with independent research firm Directions on Microsoft, believes Microsoft sees small and mid-sized business software as the "potential next big revenue wave."
But despite Microsoft's potential power -- including around US$60 billion in cash to fund acquisitions or product research -- selling to small and mid-sized companies hasn't come easily.
Microsoft's chief financial officer, John Connors, told analysts the Business Solutions division, MBS, had the weakest results of Microsoft's seven units in the most recent quarter. It met expectations but continued to lose money -- US$65 million on revenue of US$153 million.
The unit was created out of acqusitions of Great Plains and Denmark's Navision, combined with some of Microsoft's own small-business software. That's left it with a wide array of products catering to specialized needs, such as accounting and customer relationship management, for niche businesses like mom-and-pop manufacturers or small firms needing broad support.
As the company has tried to fold in its acquisitions and train its sales force, some analysts say the unit has lacked strong direction.
"At the end of the day, I think they need a better strategy," said Rob Enderle, principal analyst with the Enderle Group.
One such strategy could be to try to grab more overall business from other big companies that sell business-related software, facing off with the likes of Oracle Corp and Germany's SAP.
In defending its hostile takeover bid for rival PeopleSoft Inc in a federal antitrust case in San Francisco, Oracle is arguing that it faces an impending threat from Microsoft.
Mindful that Oracle's lawyers would be mentioning its merger talks with SAP, Microsoft disclosed Monday that it had made an overture to SAP. The talks didn't get far, the company said, as Microsoft decided such a marriage would be too difficult.
Orlando Ayala, a Microsoft sales star recently named chief operating officer of MBS, insists that businesses with 1,000 employees or less are a "sweet spot" rife with untapped potential.
Still, he says he's concerned that companies like Oracle will try to muscle into that turf, joining current competitors such as Intuit Inc and Salesforce.com. Also lurking is IBM Corp, which makes most of its money selling hardware, software and technology services to big organizations but has made a goal of getting more action from small businesses.
Ayala says MBS's growth has been stymied by the distractions of reorganizing the division. He says recent moves, which included some layoffs, are "not a retrenchment" but rather a sign that "we are putting the pedal to the metal."
DEVELOPING TALENT: The electronics contractor is looking to recruit people to work in core tech fields and emerging industries like electric cars and robotics Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, has launched a recruitment drive, offering a monthly salary of no less than NT$45,000 (US$1,485) to university graduates. For those with a master’s degree, the starting pay would be NT$52,000 per month at the minimum, while doctorate degree holders would receive at least NT$60,000 a month, Hon Hai said a statement issued early this week. The latest recruitment drive is aimed at attracting talent in core technology fields — artificial intelligence, semiconductors and next-generation mobile communications — and emerging industries — electric vehicles, digital healthcare and robotics, the
MRT TRAVEL FALLS: In February, ridership on the Taipei MRT System fell 8.96 percent from an average of 2.01 million per day in January Scooter sales jumped 13 percent last month as more commuters turned to two-wheelers to avoid public transportation amid the COVID-19 pandemic, the latest statistics showed. Sales expanded to 74,493 units last month, compared with 65,913 units in February, statistics released on Wednesday by Kwang Yang Motor Co (光陽工業) and the Ministry of Transportation and Communications showed. In the first quarter, aggregate sales slid 0.51 percent year-over-year to 186,627 units, from 187,580 units, data showed. Kwang Yang, the nation’s biggest scooter manufacturer, continued to lead the market by selling 24,136 vehicles last month, growing 6.12 percent from 20,785 units in the previous month, while
Asustek Computer Inc (華碩), the nation’s leading PC vendor, yesterday launched its first dual-screen gaming laptop powered by Intel Corp’s latest central processing units (CPUs). The PC manufacturer’s announcement closely followed the US chipmaker’s unveiling of its 10th Generation Core H-series, the fastest commercial mobile processors with speeds of up to 5 gigahertz. Although Asustek’s Zephyrus Duo 15, the highlight of its Republic of Gamers line, is not the company’s first laptop with two screens, it is its first designed specifically for gaming. Nestled between the primary display panel and the keyboard, the secondary display, which Asustek calls the ScreenPad Plus, is angled
NO ILL EFFECT: Last month’s data mainly reflected deals made in February, when the spread of COVID-19 was still relatively mild in Taiwan, housing brokers said Housing transactions in the six special municipalities totaled 19,824 units last month, up 7.8 percent from a year earlier, brokers said, citing government data. Last month’s data mainly reflected deals made in February, when the pinch of the COVID-19 pandemic was not yet evident, they said. Taoyuan posted the largest improvement, with housing transactions soaring 36.6 percent year-on-year to 3,676 units, local government data showed. Taiwan Realty Co (台灣房屋) attributed the pickup to the completion of two presale residential projects in the municipality. Houses in Taoyuan have increasingly gained in popularity in the past few year years due to relatively affordable home prices and