Targeting companies with 25 or more employees, the product fills the gap Microsoft sees between its bCentral offerings for very small businesses and the Great Plains Siebel Front Office offering for larger midsize companies that need more IT customization.

Many observers see Microsoft's offering as a direct competitor to Interact Commerce's SalesLogix and FrontRange Solutions' Goldmine sales-force automation entries in the increasingly crowded SMB arena.

"The companies impacted . . . are the CRM vendors focused on the low end of the market, such as Interact, Goldmine and Epicor," said Bo Manning, CEO of Pivotal, Vancouver, British Columbia.

Pivotal, he said, is after "midenterprise companies in the revenue range of $100 million to $3 billion. The very top of Microsoft's market is less than half the size of Pivotal's lowest target."

Interact is also putting a happy face on Microsoft's CRM news.

"The SMB space is a target-rich market with very low penetration. We feel Microsoft's move into the market validates the strategy of delivering integrated front-office/back-office applications to small and midsize businesses," said Tim Fargo, general manager of Interact's SalesLogix division.

Interact recently unveiled plans for a Web version of its CRM product to debut this fall. Sales-Logix 6 will bring all the features and functions of the company's LAN-based product to the Web and offer complete integration with Microsoft Outlook and a Visual Basic-like interface, said Kevin Myers, vice president of research and business development for the SalesLogix division of Interact, based here.

A big focus will be enabling the product to bring back-office data into the client application, Myers said.

The company is also working with mobile CRM application vendor Vaultus to implement SalesLogix natively on the Pocket PC and to provide faster wireless access to data for roaming professionals using Fujitsu to support a new generation of tablet-based computers.

Outlook integration is critical for many customers, said Joe Basile, director of CRM for e-Partners, an Acton, Mass.-based solution provider. "I'm at a sales site now, and the sales force is ecstatic about that [capability]. They can now use the application they want to because they're in Outlook all the time."

A big focus for Interact is moving its current Act contact management software customers to SalesLogix, which is more customizable and suited for small and midsize businesses.

Larry Cummings, president of SyncSite, a Birmingham, Ala., reseller, said bridging the vastly different contact management and CRM worlds can be difficult but provides many opportunities.