Thursday, November 14, 2002

Siebel v the world

I spoke with a couple of Siebel guys the other days about who their big competitor was. They are mostly worried about ERP vendors bundling CRM into their product, so see SAP, Oracle, and PeopleSoft as their big competitors. I argued it was Microsoft, since they will make easy applications that will be first class citizens on .NET and squeeze Siebel out, starting at the midmarket and moving upwards. While Siebel felt that .NET would become the enterprise standard, they did not think Microsoft was a threat because it only went after little businesses.

Outlook is used by everyone from individuals at home to people in big companies, even though it does just a fraction of what Lotus Notes does. Even people who value the extra stuff Notes can do are not willing to pay much for it, because they take Outlook as their reference product. Even if Siebel only targets big companies, there will be potential buyers on the margin who will compare Siebel's expensive application to Microsoft's cheap application and feel that, even if Siebel does more, is it really worth that extra price? A low end competitor reduces the high end incumbent's ability to price, even if the high end product is better.

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