Microsoft will next year launch a hosted customer relationship management (CRM) service while insisting it's not competing with Salesforce.com, SAP and Oracle.

Steve Ballmer, Microsoft's chief executive, told 7,000 partners Tuesday that Microsoft plans to unveil Dynamics CRM Live in the second quarter of 2007 as an online service paid for through monthly subscription. Microsoft will also provide an on-site CRM offering, Dynamics CRM 4.0 also due in the same quarter.

Dynamics CRM Live will be Microsoft's third "Live" service, following Windows Live and Office Live, and be hosted at the company's datacenters. As with so much coming from Microsoft these days, the vendor is behind everyone else. Ballmer announced Dynamics CRM Live at the company's annual global partner conference in Boston, having committed Microsoft to a hosted CRM service almost a year ago at the Microsoft Business Summit. Ballmer's statement today - which lacked any real details - simply amounted to a restatement of intention.

Salesforce.com is currently the big daddy here, claming 27,000 customers and 440,000 subscribers. During the last 18 months, SAP cautiously launched its hosted CRM service while Oracle acquired Siebel, giving the company Siebel's own growing hosted business. Smaller providers NetSuite and SugarCRM are busy ramping up customers.

Microsoft claimed it's not reacting to competitors, yet many of the details of its service are still not worked out a year after Ballmer's first announcement. Microsoft has admitted frankly that this is a "learning experience" for it.