Not so long ago, NetSuite barely factored in to Microsoft's ERP business, but a recent initiative by the mammoth technology concern has channel partners on both sides agreeing that Microsoft has become concerned about NetSuite's rising status in the market.

In March, Microsoft announced that it would pay $850 to every U.S.-based NetSuite user that switched to one of its Dynamics ERP products, which include Dynamics GP, Dynamics NAV, Dynamics AX and Dynamics SL. The new promotion is available until June 25.

For its part, NetSuite has made its own competitive moves. The company recently announced a bid to draw in more value-added resellers of its cloud-based accounting and business management software by offering VARs a 100 percent margin on first-year license subscriptions.

Dallas-based ePartners - a major Microsoft ERP reseller - claimed that it has not lost any business to NetSuite and sees a great future for Dynamics products. But chief executive Michael McCarthy still sees the significance in Microsoft's recent move. "The ERP market has been reasonably flat for the past couple of years, and this news sends a powerful message. [Microsoft is] getting serious about the competition," he said.

A number of VARs that carry both NetSuite and Dynamics products, however, claimed that the issue has come up. San Francisco's AIS Group, which has been in the Microsoft channel for 10 years, became a NetSuite partner last fall after noticing that customers were asking for NetSuite more often, enough so that it lost GP business.

"We were losing GP deals to this product in spaces like financial services. That made us take a long, hard look at NetSuite," said AIS chief operating officer Simon Whittle. "We are still active Microsoft partners and will recommend GP in the right situation."

Roslyn, N.Y.-based Business Solutions Partners also resells NetSuite as well as Dynamics GP and MS CRM, and sees the concern for many strictly Microsoft Dynamics resellers. CEO David Smooha, however, believes that the decision for a user to switch from one product to another is more challenging than a financial incentive can fix. "The [Microsoft] incentive is just not a major decision factor," he said. "In the end, anything either [vendor] would give is minimal to help overcome the pain of a transition."

NetSuite chief executive Zach Nelson is confident that Microsoft's incentive will have little impact on NetSuite's overall business: "I guarantee you, for every one customer of ours they take, we will take 100 from them."