Tuesday, June 08, 2004

Microsoft and SAP: the merger that didn't happen

Talk about an industry restructuring! Based on pretrial discovery in the Oracle antitrust lawsuit, it's now come out that SAP and Microsoft discussed a possible merger late in 2003. According to Microsoft, the talks were called off because of the complexity of the transaction and subsequent integration. SAP has confirmed the story.

It's not clear that the deal would have passed antitrust scrutiny. But if it had, and the deal had gone through, it would have made Oracle's pitch for PeopleSoft look like a used car offer. A Microsoft/SAP combination would have married the world's largest software developer, with a virtual monopoly on desktop operating systems, with the world's largest provider of enterprise systems to large organizations. The merger would have immediately turned Microsoft's applications group from a provider of business systems to small companies (with its Great Plains and Navision acquisitions) into the premier provider of complex enterprise-wide systems to the Global 1000.

Although merger talks ended, Microsoft and SAP later formed an agreement regarding integration of products via Web services and an agreement for cross-licensing of certain patents. These agreements were announced in May at SAP's SAPPHIRE conference in New Orleans.

It always intrigues me that technology companies like Microsoft and SAP can compete fiercely at one level and cooperate with each other on another level. For example, as I wrote earlier this year, SAP has been developing a deeper relationship with Sybase to provide an alternative to Microsoft's SQL Server database. At the same time, apparently, they were talking to Microsoft about a merger.

Line 56 has more on the story.

Related posts
An intriguing analysis of SAP's partnership with Sybase
Clash of the titans
SAP looks to Sybase as alternative to Microsoft

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