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Microsoft Goes after Salesforce.com with Patent Lawsuit

The saber isn't ratting anymore. It's out now, and it's pointed at one of Microsoft's biggest rivals in the cloud- and enterprise-computing markets.

Microsoft has long threatened rivals (think Linux) with patent lawsuits, but rarely has it actually made good on those threats. Only a handful of times has Microsoft sued anybody for patent infringement without Redmond being sued by the other company first. So, it seems likely that Microsoft is pretty confident in laying down the patent gauntlet in front of one of its mouthier rivals, Salesforce.com.

This week, Microsoft revealed that it is suing the CRM and cloud-computing superstar for alleged violation of nine patents. What the patents cover really isn't all that important for the purposes of this entry, except that Microsoft is attempting to force Salesforce.com to stop offering the functionality that Microsoft says it patented.

What is important is what Microsoft is trying to do to Salesforce.com, a close ally of Google and a major rival to Microsoft's Dynamics CRM Online offering in particular and to the Azure cloud platform in general. From our viewpoint, it looks as though Redmond is trying to cripple its smaller competitor -- to force Salesforce.com into an expensive and possibly protracted legal battle and to plant seeds of doubt in the market about Salesforce.com's technology. (Salesforce.com shares dipped Wednesday following news of the suit.)

It's very possible that Microsoft really did patent nine capabilities that Salesforce.com is using now. We're not saying that there's no meat here. But, again, this is a lot more than just a patent lawsuit. It's a roundabout (and unorthodox) way of introducing Dynamics CRM Online -- now clearly the bell cow in Microsoft's enterprise-applications strategy -- to a broad audience. It's also a shot fired not just at Salesforce.com but also at Google and Microsoft's other cloud rivals. The message: Microsoft is powerful. Microsoft has many ways to shape markets. Don't mess with Microsoft.

There's a message to customers and partners here, too. It says that Microsoft is serious about Dynamics, CRM and cloud-computing, and it insinuates that the company is innovative after all. Remember, Microsoft is claiming here that Salesforce.com nicked technology that Microsoft invented. Who's the copycat now? We might find out in court -- which would be exciting, but we're guessing that a settlement of some sort is more likely. Still, stay tuned. It's not every day that Microsoft draws its patent sword.

What do you think about Microsoft finally pursuing a major patent lawsuit? What message does this suit send? Direct your thoughts to lpender@rcpmag.com.

Posted by Lee Pender on May 20, 2010 at 11:56 AM