Sunday, February 24, 2008
I haven't written anything about Microsoft's bid for Yahoo, because it doesn't have an enterprise systems focus. But an article by Randall Stross in the New York Times this morning takes the story down a different path. It argues that if Microsoft wants to do a big deal, a much better target would be SAP.
Stross reasons that if Larry Ellison were running Microsoft, he most certainly would be pursuing SAP instead of Yahoo. The logic: SAP would greatly strengthen Microsoft's relationships with the world's largest corporations, strategically more valuable than picking up Yahoo's millions of free email users.
Stross also quotes me regarding a potential Microsoft-SAP merger:It's amusing to note that the most Larry-like choice, Microsoft's acquiring of SAP and leaving it alone as an autonomous division to avoid a cross-cultural integration fiasco, is the course that would be most discomfiting to Oracle. Frank Scavo, president of Computer Economics, an information technology research firm, in Irvine, Calif., said that "a Microsoft-SAP combination would be Oracle’s worst nightmare."However, as I wrote back in December, I still believe that a Microsoft-SAP merger is unlikely, for four reasons.
So, for now, I think Larry can sleep peacefully.
- It is unlikely to pass antitrust scrutiny in the U.S. and especially in the European Union, where SAP is headquartered.
- It also represents a clash of cultures even greater than the difference between Microsoft's and Yahoo's. At least Microsoft and Yahoo have historical roots as consumer businesses.
- SAP's technical infrastructure (J2EE) is entirely different than Microsoft's (.NET). If Microsoft were to acquire SAP it would either need to completely rewrite SAP's applications (no small feat, even for Microsoft) or allow them to co-exist with its own, undermining its efforts to establish .NET as a dominant platform.
- Microsoft's previous foray into selling enterprise applications has already been, in Microsoft's own words, "a humbling experience." This, despite predictions that Microsoft's acquisition of Great Plains and Navision would lead to Microsoft's dominance of the business applications market. Does Microsoft really want to go further down that road?
Rumor mill: Microsoft to acquire SAP
Microsoft and SAP: the merger that didn't happen
Microsoft: selling enterprise software is a "humbling experience"