Microsoft Business Solutions failed to execute in the United States in its March quarter, according to Microsoft CFO John Connors. MBS results were also in line with expectations.

So is the company saying that MBS’s failure to execute was expected? That’s an interesting conclusion about the Fargo, N.D.-based unit that markets the company’s four accounting software lines.

Saying that one of its emerging business did not execute has got to be a message to inspire fear in the employee base. MBS, which posted a 40 percent revenue gain in the December quarter, posted a 4 percent gain in March. Results for Microsoft’s June quarter, its fiscal year end, are expecting to be flat after the company ratcheted down revenue predictions to $180 million, a drop of $25 million, at a time when most other Microsoft divisions are booming. Well, there were indications that the December results were an anomaly. Still…

What’s wrong? Besides the saturated market, there seems to be a lot. One of the best analyses comes from Howard Diamond, who has just come into the market to become CEO of EYT, a Chantilly, Va.-based reseller.

“I think there’s a problem in Fargo, I think there’s a problem in Redmond, and I think there’s a problem with the partners,” says Diamond. Partners, he says, are still operating as they did under Solomon and Great Plains. Moreover, there is a big gap between Redmond, Wash., where Microsoft is based, and the Fargo, N.D., headquarters of MBS.

“They could do a lot better job of working together instead of against each other. The gap between Fargo and Redmond is a lot bigger than the geography,” he concludes.

Beyond that, resellers fear that Microsoft will continue jamming its model down their throats to their detriment. They were dismayed that Microsoft CRM, a product that has a chance for growth, was turned into what one says is essentially a no-margin business. They also fear Microsoft will abandon them. One said that at the January MBS Business Builders Conference, a Microsoft representative pledged loyalty to the channel--unless Microsoft decides something else might work better.

Meanwhile, it’s hard not to see the destructive force of political jockeying. One result of that was Microsoft Small Business Manager, an accounting application designed by committee, which reflected the competing views of the twin towers of Microsoft.

What will solve these problems? MBS has got to start acting like MBS, instead of like Great Plains. This is a big issue with the Solomon and Navision folks. MBS must become something beyond a business built around Doug Burgum, no matter how good he is.

Microsoft has to realize that MBS is different and stopping trying to hammer the peg into place. It’s got to come up with a more content-oriented approach, put down its pom poms and noisemakers, and come up with a message. It also has to overcome the critical mistake of pre-announcing its next generation product and then shoving the delivery date into another lifetime.

But then, with $38 billion in revenue, it can afford a lot of mistakes. As one competitor said privately, no matter what MBS has done wrong, “they’re coming.”

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