Microsoft Corp. is about to reboot the sedate world of dealership-management software.
Bill Gates and company will roll out a Microsoft-branded dealership management system in the United States early next year.
The move is sure to rattle a market long dominated by ADP Dealer Services and Reynolds and Reynolds Co. Together, ADP and Reynolds control about 80 percent of the dealership computer system market.
Under co-founder and Chairman Gates, Microsoft is known for aggressively bundling features and undercutting competitors on price when entering new markets.
Microsoft says it will focus initially on retail groups with up to 10 dealerships. The world's largest software company will sell its new product to dealerships indirectly, using software re-sellers.
"We're going to zero in on a very well defined target market that allows the product to come in, be introduced and develop a very solid reputation using a disciplined approach," says John Reed, director of Microsoft's automotive retail solutions in Southfield, Mich. "No new DMS (dealer management system) in any market would be suitable for all customers simultaneously."
Microsoft will market its dealer management system globally, tweaking the product as needed for dealerships in different regions. The product is based on Microsoft's Dynamics AX business management software, which includes such standard business applications as accounting and human services.
Danish company Infonizer Inc., of Copenhagen, will develop specific functions that U.S. dealerships require, such as finance and insurance and parts and service modules.
Microsoft has named its new product "Dealer Management System for Microsoft Dynamics AX." It will be the first time the company will offer Microsoft-branded dealership software.
Microsoft had been working with Reynolds, of Dayton, Ohio, since 2003 on a next-generation dealership management system. But the resulting Reynolds Generations Series Suite flopped in the marketplace, and Reynolds pulled the plug on the system last summer.
Now Microsoft will make a more direct attempt at cracking the U.S. market of 21,495 new-car dealerships.
It's no surprise that Microsoft wants in on the market, says Mark Rush, general manager of Ron Rush Lincoln-Mercury in Columbus, Ohio, and a member of NADA's Information Technology Committee.
"Just look at the size of the industry," Rush says. "And there has been rumor and speculation about this for years. I think there's room for Microsoft. There's room for an unlimited number of players."
In all, about 20 vendors sell dealership management systems, some with as few as 300 dealership customers.