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Speculation over the agreement abounded all of last week but on Monday the two firms announced that they would pump millions of dollars into a joint sales and services group, which will also focus on some implementation and development activities.
At the heart of the agreement however is the combination of Siebel's top-selling customer relationship management and sales automation software with Microsoft's .NET programme, which aims to allow users to access data in any form over any device.
"Microsoft and Siebel share a common vision for how enterprise applications should evolve to meet the demands of the marketplace," said Bill Gates, chairman and chief software architect at Microsoft in a statement. "Siebel Systems...combined with the power of Microsoft .NET, will help enterprises react to business change and realise greater value from their technology investments."
Analysts agreed that the deal could help chief financial officers loosen up purse strings to deploy new technologies, partly because any product or service born out of the alliance will carry the weight of two well-established industry giants.
They also noted that the deal should be of more benefit to Siebel than to Microsoft in the short term, because it will probably boost the CRM company's sales after a few quarters of flagging revenues. Last week Siebel reported a USD92.1 million quarterly loss, or USD0.19 a share, citing a USD109.4 million restructuring charge and a USD54.9 million charge related to the repurchase of stock options.
Shareholders in Siebel tended to agree with the notion that the deal could benefit the company, as Siebel shares jumped almost 4.5 percent Monday morning to USD6.25. Conversely, Microsoft shares, which opened higher, fell 1.40 percent to USD54.40 by noon. It should be noted that Microsoft said on Monday that its record third quarter revenues were an anomaly and sales would be smaller next quarter, statements that could have hurt share prices.
Over time, the pact could harm Siebel, other experts said, as Microsoft has a history of entering partnerships with companies who emerge from the deals often much weaker, or sometimes totally destroyed. And it's also worth remembering that despite the arrangement, Microsoft has its own CRM software that it does not intend to discontinue.
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