The saying “swings and roundabouts” is a British one that describes a situation where you can win and lose. I am using it here to point out that Microsoft’s combination of business divisions may be giving it advantages on both the traditional (Windows, server) as well as the Dynamics (ERP) sides.
What kicked off this train of thought was an article by Josh Greenbaum: The Realignment of the Enterprise Software Market: Oracle vs. Everyone, Microsoft in Ascendance, and Watch out for Infor. The article notes that Microsoft’s Dynamics division
… the former bastard stepchild of the Microsoft portfolio, is now becoming the poster child of innovation in Redmond. And Redmond is taking notice big time[.]
Dynamics is one of the smallest divisions in Microsoft, and I have discussed its problems in the past here, here and here, but the company now seems to have discovered a major advantage.
Dynamics is a great driver of product pull-through. Today, every dollar of Dynamics generates from $3 to $9 in additional software sales for Microsoft.
Note: the article mentions other points but my focus is the first one.
I know from a Microsoft partner perspective that product pull-through is one of those phrases that brings a sparkle to the eyes of Microsoft’s partner managers.
Does this mean that Microsoft is discovering the value of a wide eco-system? Greenbaum makes an interesting comment about Microsoft, in comparison to Oracle:
This places Microsoft front and center in a battlefield where it is deploying 21st century technology against an Oracle that fighting the battle as though this were still the 20th century.
Microsoft’s strategy seems to provide a whole range of “interchangeable, plug and play” components. In my opinion this is far better than the Oracle strategy which wants to control the full stack – from hardware, to database, application, and middleware.
I have thought for some time that the Oracle strategy of vertical integration is an anachronism since so many other industries have abandoned the practice. In effect, it is a throwback to a bygone era when IBM ruled the computer world in the 1970s.
I also wonder how customers would feel about putting all their computer ‘eggs’ in the Oracle ‘basket’? There is an advantage to having a single, strategic supplier, and a single ‘throat-to-choke’, but a small customer has very little bargaining power with such a large supplier.