Microsoft has parried verbal attacks by executives from rival Salesforce.com over Microsoft's belated introduction of a hosted CRM offering.

"Talk is cheap," Brad Wilson, general manager of Microsoft's Dynamics CRM unit, said in an interview at the company's Worldwide Partner Conference 2007 in Denver. "We are more generous to partners, more affordable to customers and we have a better product."

For instance, Wilson said, Microsoft's promised compensation to business partners that resell and support its new Dynamics Live CRM software - amounting to 10 percent of the license revenue annually - beats what is paid by other vendors, including Salesforce.com.

Microsoft last week also unveiled the long-expected Live CRM technology, a hosted offering that drastically undercuts Salesforce.com's more-established software. Microsoft said it will charge as low as $39 per user per month, about 40 percent less than Salesforce.com's lowest price of $65.

Marc Benioff, Salesforce.com's CEO, had said that Microsoft's pricing "speaks more to the inferior quality of the technology than its competitiveness as a product."

Salesforce.com "isn't sold in Best Buy," Benioff continued. "It's sold by a professional services organisation that delivers the right price to the customer and answers all their needs."

Bruce Francis, vice president of corporate strategy at Salesforce.com, also chimed in, quipping that Microsoft "has announced this service more often than Roger Federer has won Wimbledon."

But Wilson also cited improvements that Microsoft is making in its upcoming "Titan" release of Dynamics CRM, which will be the base version for the hosted offering. The promised enhancements include a "multi-tenancy" feature that will make the software run more efficiently, he said.

Steve DeMarco, vice president of business development at Xactly, a hosted sales management software vendor, said he was impressed by demos of Dynamics Live CRM that he saw at the Microsoft partner conference.

"I thought that it was very functionally rich, and that it looked ideal for that focused marketplace Microsoft does so well in," DeMarco said. Xactly's software is currently integrated with Salesforce.com's CRM applications, but DeMarco said the company plans to tie it to Microsoft's on-demand offering as well.

Microsoft said an "early access program" for Dynamics Live CRM will begin this quarter and continue until year's end. The software will be offered in both professional and enterprise editions and will initially be hosted in Microsoft's data centres, although the company plans to allow business partners to begin hosting it too late this year.

Marc L. Songini contributed to this story.