Microsoft looks to poach Salesforce.com customers with aggressive pricing

Microsoft has created an aggressively priced CRM Online product bundle that includes both Office 365 and its Power BI tool, in a bid to steal customers away from rival Salesforce.com.

The new Sales Productivity package is being offered temporarily for US$65 per user per month. That compares to Salesforce.com's Professional CRM edition, which is priced at $65 per user per month but doesn't include either an office suite or a stand-alone BI (business intelligence) product. Existing Office 365 customers can upgrade to the Sales Productivity bundle for $45 per user per month.

Microsoft's offer comes just days before Salesforce.com's Dreamforce conference, where it is rumored to be announcing a new analytics cloud service. While the conference tends to attract the vendor's most committed customers and partners, Microsoft clearly wants to draw a contrast between its offering and Salesforce.com's to anyone who might be on the fence.

"From a competitive standpoint this should signify to the market that Microsoft is getting scrappy," said Fred Studer, general manager of Dynamics product marketing, in an interview. "We're putting our money where our mouth is. If you're a Salesforce.com customer and you're thinking about renewing in the next 12 months, you have to talk to us."

It remains to be seen how, if at all, Salesforce.com will respond to Microsoft's pricing gambit.

It's hard to dismiss out of hand what Microsoft has done as merely a gimmick, according to one observer. "From a price war perspective and customer value perspective, it's very compelling," said analyst Ray Wang, chairman and founder of Constellation Research.

That said, the two vendors are competing on more than simply a price-versus-features basis, Wang said.

"We have a lot of customers choosing Dynamics CRM for deep integration to Office 365," he said. The fact that Microsoft offers both on-premises and cloud CRM deployments is another factor for buyers, he added, although the pricing bundle announced Wednesday doesn't involve the on-premise version.

Wang's clients also "like the mobile solution in Dynamics CRM better" and can easily extend the basic CRM product to fit a specific industry's needs, he added. Salesforce.com has only more recently begun a push into verticals.

However, Constellation has "a ton of customers" choosing Salesforce.com when they only want a cloud-based product, desire deep integrations between customer-service and sales applications and "like the broader company vision and messaging," he said.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com