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Following reports that Microsoft delivered a sworn statement to the Department of Justice (DOJ) earlier this year claiming it had no intentions to enter the enterprise ERP market for at least two years, some company watchers were skeptical. But given Monday’s disclosure by Microsoft that it held merger talks late last year with ERP market leader SAP AG, Microsoft’s customers and partners are scrutinizing even more closely Microsoft’s marketing claims.

Microsoft issued on Monday a brief public statement acknowledging that it held exploratory merger talks with SAP. In the statement, Microsoft officials said the negotiations broke off “a few months ago due to the complexity of the potential transaction and subsequent integration.”

According to industry insiders, Microsoft officials issued the statement on the talks to deflect Oracle’s plan to disclose the same information during the course of the DOJ vs. Oracle trial over Oracle’s attempt to purchase PeopleSoft. The DOJ-Oracle trial commenced Monday.

At the same time, Microsoft also issued a different, slightly more detailed statement to its reseller and integration partners on the merger talks. In it, Microsoft reiterated its claim that its Microsoft Business Solutions unit is focused on the small and mid-size business market, not on the high end of the market. The statement, in part, read:

“We want to assure all Microsoft partners that these exploratory discussions do not in any way detract from our focus and commitment to Microsoft Business Solutions and to delivering high value software and services to small and mid-market businesses at a low total cost of ownership.

“These preliminary discussions are consistent with Microsoft’s practice of constantly evaluating the technology marketplace and exploring ways to add value to our customers. We are pleased that after the preliminary talks ended, the two companies continued other discussions that resulted in a deepened relationship on Web services and a patent cross-licensing agreement. SAP is and will remain an important partner to Microsoft, as well as a respected competitor in the business application market for small and mid-sized organizations,” the company added.

So maybe the SAP buyout is on hold, however, the two companies recently announced a major development partnership over interoperability between .Net and NetWeaver. Click here to read more.

However, some Microsoft customers and partners were not convinced that the company is targeting only SMBs with its ERP products.

“Microsoft is full of it when they say they are not an enterprise vendor,” said one Microsoft customer, who requested anonymity.

“I work for a company that recently issued a RFP [request for proposal] for our HR and payroll system. Great Plains directly went up against Oracle and PeopleSoft for the job. Great Plains directly attempted to sell us on the fact that they could compete in the enterprise market and they gave us references for several Fortune 500 companies that have recently switched from Oracle and PeopleSoft to Great Plains.”

Likewise, Senior Systems Analyst Debbie Baliotti also questioned Microsoft’s claims. “If Microsoft has said they have no plans to enter the enterprise market in two years, why are they advertising differently on their [Web] site—and who will say anything if they change their mind in six months?” (Baliotti asked that her company name be withheld.)

“I am not sure the Oracle-PeopleSoft merger is good for other reasons but I find it appalling that anyone at the DOJ takes Microsoft’ statements seriously anymore,” Baliotti added.

However, other Microsoft customers and partners sided with Microsoft.

“According to the Oracle DBAs (database administrators) I’ve heard spouting for years, SQL Server is not an enterprise app. So by Oracle’s users’ testimonies, Microsoft couldn’t be entering this space,” said Brian Nordberg, a Salt Lake City, Utah database administrator. (Nordberg requested his company name be withheld.)

To read the full Microsoft Watch story, click here.