Microsoft will further expand its software offerings for small businesses, even though that will turn many of its partners into competitors...

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MINNEAPOLIS — Microsoft will further expand its software offerings for small businesses, even though that will turn many of its partners into competitors, Chief Executive Steve Ballmer said yesterday.

“We do believe that the business-application market will continue to get consolidated,” Ballmer told thousands of Microsoft partners from smaller technology companies at a Minneapolis conference.

Microsoft could soon be competing with many of those partners.

While it has sold millions of copies of business programs such as Word and Excel, other companies write software often customized for individual companies.

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Yesterday, Ballmer signaled that Microsoft has its eye on that market.

The company has hired more than 200 people such as doctors, bankers, and plant managers to help it write software for specific industries.

It also plans to roll out a program called Small Business Accounting in the fall that will compete with accounting programs such as Intuit’s QuickBooks.

Ballmer said he believes business software will increasingly become a product ready to use off-the-shelf, rather than written for individual businesses the way it is now, often by small software firms.

Ballmer said the additions it plans are natural fits with its Office software. Still, some competitors are wary.

Paul Kaeser said Microsoft’s new small-business push will snatch some of his customers. Kaeser is in charge of product development at Lexware GmBH & Co. of Germany.

“We used Microsoft as a platform until now, but with the launch of this small-business accounting program, we will become competitors,” Kaeser said.

He said he wasn’t sure Microsoft could succeed, though.

The company will have to write software dealing with complicated German employment and accounting rules. That will make it hard for Microsoft to replace the local expertise of companies like Lexware, Kaeser said.

“We know that things coming from Microsoft in Redmond sometimes don’t have the right feel for the European market,” he said.

Brad Allen of Dublin, Ireland-based IT Force said that since most of the world’s companies are small businesses, Microsoft’s move makes sense. IT Force helps smaller businesses outsource technology work.

Allen admitted he’d be more nervous if IT Force competed directly with Microsoft.

As it is, Allen said Microsoft’s marketing efforts to woo small-business owners helps him convince those same owners that he and Microsoft can come up with solutions for them.

In other comments, Ballmer also pledged that the MSN Internet search engine would catch up with Google and Yahoo! MSN currently lags both.

“We’re very serious about investing in a way that puts us out in front of Yahoo! and Google,” Ballmer said.