Microsoft has unveiled its intention to establish an online marketplace and exchange for partner applications that can be used in conjunction with its own applications, starting with the forthcoming on-demand version of its CRM offering, Microsoft Dynamics Live CRM.

The exchange, to be launched in 2008, bears a striking resemblance to software-as-a-service CRM vendor Salesforce.com’s AppExchange, on which partner developers and independent software vendors (ISVs) can market and sell supplementary application functionality to Salesforce.com’s users.

Microsoft denies that the idea is copied from Salesforce.com, insisting that it has been in development at the company for many years. "This is not in response to anybody, but it definitely will be in competition,” Brad Wilson, general manager of CRM Live told Microsoft’s World Wide Partner Conference in Denver this week.

The announcement evinces the maturation of Microsoft’s attitude towards online application delivery. Software-as-a-service, it now appears to recognise, is not just a new payment model, but a way of exploiting network effects and online community building to offer customers more choice of functionality.

Salesforce.com, unsurprisingly, is unimpressed with the announcement. Bruce Francis, the company’s vice president of corporate strategy, questioned whether Microsoft Dynamic Live CRM even exists.

Further reading

Microsoft CRM Live developer blog
Information Age analysis - Microsoft's on-demand quandary
Information Age feature - Office 2.0 - cloud computing approaches the desktop