Every so often, I hear that Microsoft is doomed because it didn’t get into tablets quick enough. Or that Microsoft is too dependent on Windows desktop licenses and Microsoft Office and that mobile and cloud are going to eat the margins on those products. Or that Azure and Bing are non-starters and that Microsoft is doomed in the cloud. Or that the Xbox is the company’s only way forward.

I’m not going to address each of these matters individually, as I’m sure there are plenty of places where you can find both sides of those claims argued extensively. But here’s one important element of Redmond’s future strategy that I don’t hear a lot about: Microsoft Dynamics.

A Windows 8/Metro style start page concept that Microsoft provided to Mary Jo Foley/

I mentioned this a few months ago when I registered my surprise at the Dynamics line’s 19% revenue growth, and later when Microsoft yet again posted double digit (30%) growth for the line.

The line is being integrated into Microsoft products ranging from Kinect to Sharepoint to Bing, and the CRM application is adding a social activity stream that could help bridge many Microsoft apps. It also has a burgeoning app marketplace.

Most importantly, Dynamics will be another cloud entry point for Microsoft. Microsoft already offers Dynamics CRM as a software-as-a-service. The company also plans to offer the ERP line on Azure, which will extend Azure’s usefulness beyond infrastructure/platform-as-a-service. These cloud offerings put Dynamics in direct competition with other software-as-a-service ERP and CRM offerings such as Salesforce.com, SAP On-Demand and Oracle Fusion Apps.

ServicesAngle

Dynamics is becoming the underpinning for new applications built by service providers, such as the “patient relationship management” software built by Microsoft and EMC for Denver Health. Microsoft has two real challenges here, however, for making Dynamics a truly viable long-term solution for enterprises.

First, there are several vendors with a big head start on offering ERP in the cloud, including NetSuite and Workday. Even the old-school vendors like Oracle and SAP have a head start at this point.

Second, Microsoft needs to embrace a truly cross-platform mobile strategy for the Dynamics line. So far Microsoft’s Dynamics strategy has been to go head to head with competitors and trying to offer a better product. But if it ties Dynamics too closely to its own Windows 8 and Windows Phone platforms in an attempt to boost sales there, it risks marginalizing its products in a world where iPad, iPhone and Android devices are increasingly the norm. The Azure, Bing and Office teams have each embraced a multiplatform strategy. Azure is expected to support Linux in the future, and there are Bing and Office apps available for Android and iOS. Dynamics needs to follow this tradition to stay relevant, and the and the CRM team, at least, is promising this.

Dynamics could be a huge, low margin revenue source for Microsoft, and a great hedge in the mobile/cloud future. Keep your eyes on this one.