Challenges Ahead

Microsoft finds itself balancing competing goals and conflicting priorities as it attempts to rationalize the MBS product portfolio and align it with other Microsoft corporate strategies. On one hand, pressure to reduce costs would push the group to eliminate redundant development and channel efforts (although this pressure could soon be strictly internal, as Microsoft will stop reporting financial results for MBS as a stand-alone business segment after the June 2006 quarter).

On the other hand, the group hopes to continue growing MBS revenue and market share, and to prevent competitors such as Epicor, Oracle, and Sage from gaining ground in a market that today lacks clear vendor leadership. To do so, the company must plot a course that attracts new customers and partners without alienating existing ones-including customers or partners devoted to one of the four product lines. At least for the moment, Microsoft appears determined to capitalize on existing opportunities, even if it means carrying the overhead of an overlapping product portfolio for five or more years.