Ballmer: We will continue to compete hard with SAP

Microsoft is more focused on providing business applications to small companies than any other vendor, claims the software giant's chief executive

Microsoft chief executive Steve Ballmer has attempted to reassure the company's partners and independents software vendors that its attempt to acquire SAP is no reflection on its faith in its own ERP products.

Speaking at the software giant's annual Worldwide Partner Conference in Toronto, Ballmer claimed that the attempt to buy the German ERP giant was not motivated by lack of belief in its own Microsoft Business Solution family of ERP, CRM, financial and supply chain products.

"Nothing about that discussion takes away from where we are and what we are doing with MBS in the mid-market," he said. "We looked at buying SAP, it didn't happen, and now we are still focused on the strategy that we were always on."

Ballmer attempted to reassure the audience of partners and independent software firms that the talks with SAP in no way compromised Microsoft's backing of its services partners when competing for business with the ERP vendor. "It was a great exercise, we know the folks at SAP a lot better now. But if it is one our MBS partners against SAP, then we are going to compete and compete hard."

The news of the potential SAP buyout by Microsoft emerged as part of Oracle's antitrust trial with the US Department of Justice. Ballmer maintained that Microsoft had decided to be "upfront about the deal rather than let it dribble out in the trial".

Microsoft approached SAP last year about a merger, shortly after Oracle launched its hostile bid for PeopleSoft. The merger would have put Microsoft into the high end market for business software -- a move company documents say it wouldn't pursue by other means. But the companies abandoned the proposal -- which Microsoft had code-named Project Constellation -- earlier this year after deciding that the merger would be too complex.

The importance of the small-business market to Microsoft is one of the enduring themes of this year's partner conference. The software vendor recognises that with enterprise IT spending on the wane, the opportunity to sell business applications to the small and medium-sized organisations is vital to the company's future.

"We have the deepest involvement in small businesses of any technology company in the world bar none," said Ballmer. "No one else is even close despite all the yap-yap from IBM."

When questioned by an ISV on what Microsoft's ambitions are over the next three years, Ballmer said that the aim was to recreate the success of its MBS business in Denmark across the rest of the world. "When you ask what my ambition is for the next three years then my answer is that I want to make the whole world Danish."

He claimed that Microsoft has more active MBS partners in Denmark per capita than anywhere else in the world, and that if the company could recreate the success of its Danish small business strategy across the globe it would mean a tenfold rise in revenues from its MBS business. Of course, much of this success was inherited with the company's purchase of Navision, a Danish business that Microsoft purchased, along with the US business Great Plains, as part of its entry in the small-business marketplace.

Microsoft's merger discussion with SAP was driven by the company's long-standing desire to jump-start its own enterprise applications business and offset slowing growth in its traditional strongholds of operating systems and desktop software.

Documents introduced as evidence in the Oracle trial also show that Microsoft saw a deal with SAP as a way to hedge against any further incursion into its database business, should Oracle succeed in its pursuit of PeopleSoft. The company also sought to acquire SAP before rival IBM could make its own bid, the documents showed

CNET's Mike Ricciuti contributed to this report.