Microsoft And The Dynamics Of Enterprise Software – Microsoft Corporation (NASDAQ:MSFT)

If you taste success after doing something once, the natural tendency is to keep doing it as much as possible. That’s exactly what Microsoft (NASDAQ:MSFT) is doing with its Dynamics 365 suite of CRM (Customer Relationship Management) and ERP (Enterprise Resource Planning) tools on the cloud. The success of such Software-as-a-Service – SaaS – products as Office 365 has allowed the company to expand further into the enterprise software segment. And slowly, but steadily, Dynamics 365 is growing, which is making Microsoft’s already strong position in the enterprise software market that much stronger.

How much stronger? Let’s see.

When Microsoft wrote a check for approximately $26 billion to buy a professional networking site, its key motive was data. Yes, LinkedIn is also a valuable asset raking in not-too-shabby revenues, but the primary motive was data. Microsoft had at least 450 million reasons to make such an expensive and apparently risky bet.

The truth is, it’s not even about data. LinkedIn was Microsoft’s doorway to enterprises around the world, the segment where Microsoft wants to sell as many software products as possible using its new-found strength in cloud computing. And those 450 million reasons comprised LinkedIn’s user base, a very potent prospect list for any company targeting the enterprise segment.

So, it was not really a surprise when Salesforce.com (NYSE:CRM), another strong player in the enterprise software market, was also in the race to buy LinkedIn. In fact, here’s what Salesforce.com’s Chief Legal Officer, Burke Norton, said in a statement:

“By gaining ownership of LinkedIn’s unique dataset of over 450 million professionals in more than 200 countries, Microsoft will be able to deny competitors access to that data, and in doing so obtain an unfair competitive advantage.”

How is Microsoft Leveraging this Advantage?

Salesforce.com does not compete with Microsoft in the office productivity software segment. It is a major…

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