Microsoft said on Wednesday that it plans to delay until next year the release of its new customer relationship management software, which it had slated for release by the end of the year. The company is still testing the product and plans to ship version 1.0 early next year. "We've ended up with a couple of small delays over time and now we're wading into the holiday," said Holly Holt, Microsoft's senior product manager for MSCRM. "But we are very close, we just need to get through the final testing." Microsoft has also pushed out the release of the international version of MSCRM, Holt said. The company expects to ship that version by September 2003, rather than the previous goal of June. Analyst weren't surprised by the delay. "This is a lot harder than you think," said Bruce Richardson, an analyst at technology research firm AMR Research. "There will be a lot of demand for this product, but it needs to be more than a generic sales force automation tool." Microsoft needs "to think carefully about features and industry requirements. They may have been too optimistic (by aiming for a year-end release)," Richardson added. Other analysts said initial test versions of MSCRM are missing key features that other CRM competitors offer, and that may be holding up the release. The product is weak on workflow, for instance, a feature that triggers users to take the next step and automatically shuttles data to other applications, according to Sheryl Kingstone, an analyst at The Yankee Group. Kingstone said the product also lacks the ability to be customized and features fewer integration points to Microsoft's line of accounting applications than anticipated. "They've done a lot of building from the ground up, and it's just taking them longer than expected," said Kingstone. Holt denied that Microsoft is adding any significant new features at this point. "We're looking at the final stages of testing, and feeling good about it," said Holt. "It's incredibly late in game to make significant feature changes." Holt added that the professional version of the product, starting at $1,295 (£800) per user, will come packaged with links to Great Plains Edition, one of four accounting applications the company sells through its Microsoft Business Solutions division. Integration with the other packages -- Solomon, Axapta and Navision -- will come in later releases. Microsoft CRM, or MSCRM, is Microsoft's first foray in the multibillion-dollar customer relationship management (CRM) market, in which rivals Siebel Systems, SAP, PeopleSoft, Pivotal and Best Software compete. CRM software is designed to help companies streamline sales and marketing activities, while improving customer service. Microsoft first announced its intention to build its CRM product in February. The company provided a first glimpse of MSCRM in July. In a demonstration, the company showed how MSCRM is closely tied to Microsoft Outlook, the company's popular e-mail, contact and calendar system. The company also announced the price of the software, starting at $395 per user. Designed for companies with fewer than 500 employees, MSCRM is expected to compete head-on with other CRM applications for small businesses, such as FrontRange Solutions' GoldMine, Best Software's SalesLogix, and hosted applications from Salesforce.com and UpShot. But analysts believe Microsoft will eventually compete with Siebel Systems, SAP, PeopleSoft, Onyx, and Epiphany at the higher end of the market. Another analyst said the delay in Microsoft's international release is more worrisome than a slight slippage in its North American release. "The CRM market is growing faster in Europe than in the U.S.," said Erin Kinikin, an analyst at Giga Group. "That's three more quarters that Microsoft isn't (in) the game."