Sage Software says it expects European Union competition regulators to closely examine the company’s strategy. Office is a monopoly and anything bundled into it is leveraging that and it is unfair, an official told ComputerWire.
Even if the software were to be sold in a separate box, the company believes Microsoft would benefit from a level of integration not available to independent software vendors. But the crucial issue is pricing as competitors fear that Microsoft might offer a bundled package far cheaper than it would cost customers to buy their application as well as Office.
A Microsoft official said the company hasn’t finalized its packing and pricing since it is still in beta testing. He said it plans to offer customers the choice between versions of Office with and without Microsoft Office Small Business Accounting.
Microsoft is currently appealing against a 497.2m euro ($613m) fine for breaking European Union competition law, and has been forced to offer two versions of Windows in Europe, one with Windows Media and one without.
The Small Business Accounting program, designed for companies with up to 25 employees, poses a big competitive threat to both Sage and Intuit Inc, which have built a huge user base among SME customers on both sides of the Atlantic.
Microsoft insists it has taken extensive legal advice over the issue, but the company’s move will create a new battlefield over claims it is using its desktop monopoly to move into new software markets.
Microsoft has set a late 2005 date for the release of its Office for small business management package in the US, with releases in other markets to follow. On top of the Office 2003 programs, and the small business accounting offering, it will include an updated version of Outlook, giving users business contact manager software.
The company said the market is big enough for all the players. Small business is a largely fragmented and underserved market today – Microsoft believes there is ample opportunity for multiple vendors to co-exist and serve the technology needs of the nearly 40 million small businesses worldwide, it said.
Though Microsoft bought Great Plains Software for $1.1bn in 2000 and Navision in 2002, it has yet to establish itself as a strong force in enterprise software. SMEs tend to be conservative, and Sage estimates that the number of customers switching to other software suppliers is about 3%.
When it comes to companies setting up for the first time, there is everything to play for, and a bundled Microsoft Office and accounting application could offer formidable competition to established market leaders.
