July was the month that Microsoft and Salesforce.com stumbled, the acquisition feeding frenzy continued unabated, financial results seemed to exceed expectations, and an EU court ruling was delivered that could have far reaching effects for software vendors.

So, first to Microsoft. A somewhat under the radar blog post from Microsoft Dynamics General Manager Dennis Michalis on July 6 revealed that the headline components of Microsoft’s Dynamics CRM ‘Q2’ release – its new mobile client and cross-browser support – would be delayed until the back end of the year. It later appeared that other previously announced functionality around activity feeds and custom workflow capabilities had also been delayed.

The reasons were less than clear. It may be that maintaining a six monthly release schedule across both its on-premise and cloud-based versions has proved more of a challenge than it had expected, or that the impending release of Windows 8, the announcement of the Surface tablet, and the acquisition of Yammer, had led to a late change of strategy. Either way, customers and partners will be hoping for more certainty and clarity around future releases.

The $1.2 billion acquisition of Yammer closed in July. Yammer will operate as part of the Office team, but will continue as a standalone product for the time being at least. How well it will fare in its new home remains to be seen, but the omens were not entirely fortuitous given the six billion dollar goodwill impairment charge that Microsoft took in its fourth quarter figures released in July, which related to its 2007 acquisition of aQuantive.

The result was a loss for the quarter of $492 million, but one off charges aside, the underlying performance was steady with revenue up 4% on the same period the previous year. Dynamics CRM was singled out for an honourable mention, with revenues noted as up 25% to a total of 36,000 customers, and 2.7 million end users (which by my maths means an average implementation size of 75 users).

Microsoft’s, perhaps belated, conversion to cloud-based services, seems to be driving much of this growth with figures emanating from its World Partner Conference in Toronto suggesting that 60% of new Dynamics CRM implementations are now cloud-based.

Microsoft wasn’t the only CRM vendor with problems in July. Salesforce.com suffered another major outage on July 10th which impacted seven of its instances, and impacted users across the globe. This follows on from another major outage at the back end of June. Two such incidents in such a short space of time may worry existing and prospective customers, and Salesforce will be anxious that there are no further repetitions in the near future.

Salesforce’s outage issues didn’t seem to impacts its appetite for further acquisitions however, announcing the estimated $70 million acquisition of Nova Scotia based, browser collaboration business, GoInstant. Unlike some recent acquisitions it appears that GoInstant will remain as a standalone business, though presumably its technology, which allows users to co-browse the same website without downloading any software, will have applicability to Salesforce’s sales and customer support offerings.

Oracle, who is on a similar acquisition tear, announced their third big social media purchase in the last few months, buying Involver, who offer an application development platform for Facebook and other social media sites. The terms of the deal were not disclosed.

Oracle didn’t have everything their way in July however, being on the losing end of a judgement by the Court of Justice of the European Union (CJEU), in their case against a German company, UsedSoft, who, as the name suggests, sells second-hand business software licences. The judgement, which has implications beyond this specific case, means that even if a licence agreement prevents resale of the software the copyright holder can no longer prevent it. Whether this will result in a burgeoning second-hand market for software remains to be seen, but, as if further encouragement was really required, it’s likely to push vendors towards cloud-based, software as a service offerings, where resale isn’t a consideration.

Elsewhere on the acquisition front, Kana Software acquired contact centre software vendor, Ciboodle from the Sword Group, on unspecified terms. Kana who purchased government to citizen CRM provider Lagan in 2010, and more recently, Trinicom, have ambitious plans to meld their respective customer experience offerings. As with any major merger the challenge will be in the execution. With most commentators highlighting significant cultural differences between the two businesses it will be interesting to how things pan out.

Finally, there was a rash of other financial updates that seemed to belie the general economic gloom. SAP reported double digit revenue growth in all regions, with quarter two net profit up 13% to 661 million Euros. Netsuite’s Q2 revenues were up 29%, and non-GAAP earnings up 192% year on year to $4.8 million. Infusionsoft reported that it had grown its customer base by 1,500 to 9,800 in the second quarter.

That concludes my take on the news for July. If I’ve missed or misunderstood anything significant please feel free to comment!

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