There is a company in New York City that publishes trade magazines and newspapers for the retail trade, and it has been successful in that effort. It also published two newspapers that did not do so well. I worked for both of those.

So why should a fine company do so poorly? The company, Lebhar-Friedman, does extremely well with publications such as its flagship, Nations Restaurant News, whose readers are the storeowners. For six years, it tried to serve readers who were the owners of computer stores through Computer & Software News, and for a different six years, it tried to reach accountants through Accounting Today. It folded the computer book, which never made money. In 1993, it sold Accounting Today, which never made money until its sale to the Thomson Corp.

A lot of things went wrong, but I call one of them cultural incompetence. The people running the company understood the retail business. More important, they liked it. They felt at home in this market. They never got comfortable with either technology or CPAs.

I call this “When smart people do dumb things.” And it is part of what is at work with Microsoft’s involvement in financial software through its ownership of Microsoft Business Solutions, the former Great Plains and Navision.

Sage Software is in the accounting software business because it wants to be. Great Plains and Navision, and Solomon and Damgaard before them, were in the business because they wanted to be. Microsoft is in this business because it believes it has to be there. And that’s true. I agree they must.

And therein lie many of the difficulties and strange moves that Microsoft makes in this business. Someone told me that, last year in New Orleans, Orlando Ayala, the executive who runs Microsoft’s worldwide channel sales, looked bored on the main stage when accounting software was being discussed. I didn’t notice that. I did notice that CEO Steve Ballmer got very enthusiastic about Small Business Server and talked to an accounting software reseller about how Microsoft products will “help you compete with IBM, Oracle, and SAP.” I got the opinion that Microsoft, logically enough, looks at its success in the mass market and in systems software and figures that its formula will work in accounting software.

I believe that to be a bad assumption. But here’s where excitement and caring come in. If you care about a market, you’ll overcome the mistakes, the attempt to force models together when they don’t fit. Remove all the numbers and talk of product evolution and platforms and get down to caring.

Right now Sage has a big advantage because its top management grew up in this market and cares about it. Microsoft is different. Microsoft has a lot of advantage in its size and its name. But people with the right skills and fire in their bellies can overcome a lot of barriers. It doesn’t mean Microsoft won’t win. But it does mean that its victory is not assured.

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