Microsoft: Salesforce Is In Our CrosshairsMicrosoft: Salesforce Is In Our Crosshairs

In an indication that it's on track to meet its goal of providing half of its business applications from the cloud within the next few years, Microsoft said about 50% of the 40,000 users who have downloaded the trial version of its new Dynamics CRM 2011 customer relationship management suite have opted for the online version.

Microsoft officials said the statistic validates their decision to invest heavily in both cloud-based services that will run off its Windows Azure operating system, and in products designed for use in traditional client-server architectures that rely on Windows Server.

"To us, it supports 100 percent the hypothesis of the importance of mixed deployment mode, and the ability to give people that choice," said Kirill Tatarinov, VP for Microsoft's Business Solutions Group.

Microsoft launched Dynamics CRM 2011 on Jan. 17 with an eye to challenging online incumbents like Salesforce.com.

The offering encompasses Dynamics CRM Online—the company's first, fully cloud-ready CRM package. For users with doubts about the cloud—the concerns most frequently cited are security, data access, and vendor lock-in—Tatarinov said the online and on-site versions are built from the ground up to be interchangeable, so that moving from one to the other is relatively painless.

"We offer it in a symmetric fashion, which essentially allows customers to start in one mode of deployment and move into another mode of deployment," said Tatarinov, who spoke on a conference call hosted by analysts from Cowen Group.

Tatarinov said the hybrid approach gives Microsoft the ability to quickly ramp up nimble CRM services aimed, very specifically, at current Salesforce.com customers, while also engineering enterprise solutions that have enough depth to entice users from traditional programs such as Oracle's Siebel wares.

"Salesforce is quite obviously the target," said Tatarinov, of the online version. "From the competitive switching perspective, the interesting opportunity here is to help existing and kind of legacy customers of Siebel to move into the future, and that is obviously a big portion of the overall approach to the market."

Microsoft currently counts about 27,000 customers for its Dynamics CRM franchise, including cloud and on-premises users. It's currently offering Dynamics CRM Online at $34 per user, per month, through June. After that, the price jumps to $44.

The company's efforts to push CRM into the cloud are consistent with its approach to other platforms. Former Business Division head and now Nokia CEO Stephen Elop told information in late 2008 that 50% of Microsoft's SharePoint and Exchange collaboration and e-mail business "will be served up from the cloud" by 2013.

As for ERP, Microsoft's next version of Dynamics ERP AX will be cloud-ready when it launches in 2012, Tatarinov said.