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Pivotal Software, a Vancouver-based CRM company that had some success in the Enterprise market, hitched their wagon to a star: Microsoft. Now, normal logic would imply that this is a business strategy worthy of praise in any case, unless of course you are dealing with an 800 pound gorilla.

And, obviously, that’s just what MSFT is. Their market position gives them the luxury to both embrace you and marginalize you, which is exactly what happened to Pivotal. Their focus on developing exclusively with Microsoft tools using Microsoft platforms placed them in a poor market position when confronting very large enterprises, service providers, et al who typically like the feel of more robust unix-based solutions. And since the growth in the Windows NT/2000 marketplace was largely occurring in SMBs, who remain unconvinced of the value of CRM given its high cost, they were fighting an uphill battle from the start.

While Pivotal aligned around MSFT and waited for the sales to roll in, rivals like Siebel went out and grabbed market share by interoperating on a fairly non-exclusive basis with every Operating System. They were larger companies with existing revenues who were better funded, and they could afford to sustain multi-platform development teams.

For a brief time, though, Microsoft appeared to be gaining ground in the Large Enterprise space, with more and more organizations jumping on the NT bandwagon. This bode well for Pivotal, as a rapid shift away from proprietary hardware and UNIX-based Operating Systems to Microsoft effectively negated the advantages realized by the larger firms.

But then the boom economy collapsed. CIOs stared looking at the bottom line and what were they spending the most on? Microsoft licenses. Now witness the rise, once again, on UNIX; this time in the form of LINUX operating on cheap Intel hardware. While not yet a sea change in corporate America, it is an emerging trend, especially in Europe.

Pivotal is on the rocks because they took a conservative bet that was, given their funding envelope, the right one for its time. They could have and should have executed on a new plan which gave them an alternative beyond acquisition by Microsoft. Now, faced with a rumoured 40% layoff, it’s going to be difficult to dig out of that hole.

-Ian.

—– http://www.eweek.com/article2/0,3959,644208,00.asp

October 22, 2002 Microsoft, Siebel Ink .Net Pact By Dennis Callaghan

Microsoft Corp. and Siebel Systems Inc. finally announced their long-awaited partnership Monday, committing the two companies to joint development and marketing agreements.

As expected, Siebel will increase its commitment to Microsoft’s .Net platform and use Microsoft’s Visual Studio.Net as its primary application development tool. Siebel applications will be optimized for .Net, and new versions of Siebel will be delivered in conjunction with new releases of .Net, officials of the two companies said.

In addition, joint development efforts will be undertaken to improve performance, scalability and reliability of Siebel apps running on .Net.

As previously reported by eWEEK, the alliance also calls for Microsoft’s BizTalk application integration server to support Siebel’s Universal Application Network for business process integration among disparate applications.

Siebel’s embrace of .Net will also enhance the interactivity of the Siebel Smart Client introduced in the browser-based version 7 of Siebel’s applications, Siebel officials said. .Net support will also improve integration with Microsoft Office applications and support deployment of Siebel apps on mobile devices, officials said.

In addition, Siebel applications will be optimized for Windows Server operating systems, Microsoft SQL Server and the Microsoft .Net Framework, officials said.

The deal also includes joint sales, marketing and customer support activities.

Siebel’s increased support for .Net would not inhibit its Java support, insisted Ed Abbo, vice president of technology at Siebel.

“Our customers are demanding support for both J2EE and .Net so we’ll interoperate with both stacks,” he said.

A Microsoft official said the Redmond, Wash., company would continue to develop its own CRM applications, which are not affected by the deal with Siebel.

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