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The Big Announcement -
Persistent Rumors are Laid to Rest
Prior to the 2002 Stampede Conference, the primary
concern on everyone’s mind related to persistent rumors that Microsoft might
discontinue one or more of its products. During Doug Burgum’s keynote
address and the following general session (presented by Jodi Uecker Rust &
Tammy Rellar) it was made very clear that Microsoft not only plans to
continue all of these products lines well into the foreseeable future, but
they plan to grow these products at an unprecedented level. Specifically,
Rust and Rellar reported that:
1. Microsoft is budgeted to spend 20 times more on
research and development of the Solomon product line than was spent by
Solomon the year before they were acquired by Microsoft.
2. Microsoft also plans to spend 6 times more on
research and development of the Navision product lines than was spent by
Navision the year before they were acquired by Microsoft.
3. Microsoft expects to spend 9 to 10 times more on
research and development of the Great Plains product lines than was spent
by Great Plains the year before they were acquired by Microsoft.
Can We Believe These Claims?
I have known Doug Burgum for approximately 14 years,
and I have carefully watched the promises and commitments Mr. Burgum has
made over the years. To my knowledge, Doug has kept every single promise he
has made.
Is Doug Burgum in Charge?
Ok, so we have established that Microsoft publicly
plans to continue their product lines well into the foreseeable future. We
have also established that Doug Burgum is trustworthy in making these
comments. However, one might ask whether Doug Burgum is actually in a
position to deliver on these promises. I must confess that this question did
cross my mind. At the conference it was very evident that Doug is
the man. Microsoft has reorganized themselves into seven different units,
with Doug heading up the Microsoft Business Solutions Unit which includes
the accounting software business applications. These seven business units
are as follows:
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Picture of the slide I took at the Conference
that Describes the Seven New Divisions at Microsoft |
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Windows
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Office (iWorkers)
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Business Solutions
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Servers & Developer Tools
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CE Mobility
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Games & Xbox
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MSN Services
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It was explained that from this point on, instead of
operating as a single company, Microsoft will operate these seven functional
areas as separate operational divisions, with Doug Burgum leading the
Microsoft Business Solutions Division. At the conference, it was very
obvious to me that Doug Burgum is indeed in charge, and that the road for
Microsoft's Business Solutions division looks extremely promising. I am
satisfied that all is well.
What Rumors?
In case you have been living in a cave and you are
curious about which rumors I am talking about, here is a recap of the
specific rumors that have been floating around :
- One frequent rumor has been that Microsoft would
discontinue the Solomon product line. This rumor was particularly fueled
this August at the 2002 ACCPAC Partner Conference in Las Vegas where a
speaker reported that “Microsoft would
discontinue Solomon within a year”. As fate would have it, I was the following
speaker and I did my best to reverse the damage. I reported that I thought
that the previous speaker was absolutely wrong and that Microsoft had no
plans to discontinue Solomon and that in fact the Solomon product would be
around for many years to come. I based my statements on discussion I had
previously had with the Microsoft programming team who had informed me of
the enormous outlay of funds for further developing the Solomon product
line.
- Another rumor has been that Microsoft would have to
discontinue at least some of their accounting software products because
several of their products compete head-to-head. To this rumor, I ask "why
can't Microsoft simply support multiple products that compete
head-to-head?" After all, for many years Microsoft has owned and supported
the Access database, the FoxPro database, the SQL Server database, and now
the MSDE database (or Microsoft Data Engine, which is a limited version of SQL Server). With this
example, Microsoft has proven that it can and will support multiple
products - even if these products compete head-to-head, or close to it. In
fact, at the conference Microsoft announced a critical strategic change in
that they have eliminated product-specific account managers in favor of
region-specific account managers. This change was made because the use of
product specific account managers was causing problems (which I understood
to mean too much in-house competition; too much fighting over leads, etc.)
Now, it no longer matters which product is sold, the account managers are
simply interested in sales of any kind - a key change in posture that
reflects the fact that all products will survive for the foreseeable
future.
- A third rumor has been that Microsoft will raise
prices for their products, cut margins to their partners, and eliminate
smaller partners/resellers. There was no evidence that supports these
rumors at the conference. It is true that Microsoft did change their
pricing, but did so in order to simplify the pricing and make it similar
across all product lines. Now, the same modules and user licenses for Solomon are
identically priced to that of Great Plains. This allows customers to
choose products based on features, not pricing. It is also true that
Microsoft changed their margins, but did so in a "margin-neutral" way, so
that resellers would generate roughly the same profit margins given the
same levels of sales as in prior years. There also was no evidence that
Microsoft plans to reduce its number of partners in any way - although I
am not sure exactly how the modified margin plan will impact the smaller
partner. At one point it was stated that resellers who sell more could
make higher profits. If this is true, and margin neutral changes were
made, then it stands to reason that resellers who sell less might stand to
generate lower profits. Therefore it may be construed that smaller
resellers may be adversely affected - but I can't emphatically report that this as an obvious
attempt to eliminate resellers. Instead, this change seems to be mostly
intended to reward higher sales.
Conclusion
Microsoft needed to address these rumors and they did. I left the
conference with very few concerns about the future of Solomon, Axapta,
Navision or the Great Plains product lines. Further, I left the conference
with very few concerns about the leadership and direction of Microsoft. I
have renewed confidence in recommending these solutions and my advice to you is "Buy all the
Microsoft stock you can."
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