Microsoft feels bid heat.

Software giant Microsoft has acknowledged its proposed acquisition of US-based, mid-market solutions provider Great Plains may affect its relationship with Sage as it will become a competitor of the UK-based company.

Microsoft signalled its aim to move into the business applications market with a #747m offer for Great Plains after six months of talks. It is expected the deal will be sealed in February following US government approval.

Great Plains and Microsoft have enjoyed a close relationship for several years and in Great Plains’ 1998 annual report, Microsoft chief Bill Gates, said: ‘The relationship is an example of a real partnership that demonstrates how technology companies can work together for the true benefit of our mutual customers.’

However, Sage and GP have also enjoyed a long and successful relationship – Microsoft admitted this week that although it hoped it would continue to work with Sage, the acquisition may not make that possible. It is not clear whether Sage and Microsoft will now be able to work together or if they will be competing against other. It is also unclear whether the Great Plains brand would be retained once the deal is finalised.

Paul Tollet, Microsoft small business director, told Accountancy Age: ‘We notified Sage prior to the announcement of our intentions due to the professional relationship we have with them.

‘We are hoping our relationship with Sage will continue – both parties are digesting the developments to find out exactly what it means, there will remain many opportunities for us to work together. We are going to be competitors in certain areas but it’s not clear yet where.’

Sage would not comment on the situation but its relationship with Microsoft includes the use of its technology and development tools when developing software, particularly with its enterprise sized products. The deal has attracted controversy in the US after a Silicon Valley start-up filed an anti-trust letter with the US justice department calling for an investigation.

Several years ago Microsoft pulled out of a deal with entry level vendor Intuit after bowing to pressure from rival vendors.

Until recently, Microsoft’s plan for the business market focused on supplying business customers with a platform and letting them choose the ‘best of breed’ solutions from the many applications available.

The move could help Microsoft create its own suite of applications to help small and medium-sized companies run their businesses.

More on the deal at

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