ORLANDO, FLA. — Microsoft’s good friends over at Oracle released the new edition of Oracle CRM On Demand today — conspicuous timing, as Microsoft Convergence 2008 this week highlights Microsoft Dynamics CRM 4.0 and Dynamics CRM Live.

Oracle’s move drew some rolling eyes and chuckles from Microsoft partners here today. Most see Oracle trailing Microsoft in the race to catch Salesforce.com atop the hosted CRM market.

“Salesforce.com, that is really our only competition now,” said Linda Rose, founder and CEO of RoseASP in San Diego.

Ravi Agarwal, CEO of groupSPARK, a Microsoft hosting partner in Burlington, Mass., agreed. Hosted CRM targets SMBs, but Oracle is not strong with those customers, he said.

“It will take them time to figure out the market,” he said.

SearchITChannel.com will be reporting live from Convergence this week, with all the news on CRM, ERP and any other TLAs you can think of — until it gets to be TMI.