Microsoft, which last year acquired Great Plains Software, would find it hard to attack the conservative SME market, said Sage chief executive Paul Walker.
Speaking at the Regent Associates conference Walker said: ‘Microsoft has acknowledged that it will take a long time to put a service in place for SMEs because they have already bought software and they won’t change it just for technology’s sake.’
He said the current harsh economic climate was making it hard for new rivals to break into the accounting software market.
‘It makes it much more difficult for new companies to enter the market if they are relying on new licence revenue. They will have to sell out at an early point in the cycle to bigger players and that will go on for the next two or three years,’ he said.
‘In the small and medium sized enterprise market local markets and local support plays an important role. Trying to build a business on new licence revenue alone is hard.’
Walker said the market was maturing to become more like the aerospace industry where services are more important for revenues than products: ‘The software we provide is becoming a smaller part of our revenue.’
Walker said the key was to hook companies on Sage software when they are small, because then they are likely to spend more later. ‘If you don’t have them in the first place trying to find them when they step up [in size] is hard.’
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