What Might Have Been: Microsoft Almost Bought SAP

steveorama writes "This article from Bloomberg indicates that 'Microsoft Corp, the world's largest software maker, approached late last year about buying the German company, a combination that would have vaulted it to the biggest seller of software for business applications.'" The talks came out in advance of likely disclosure in the ongoing merger battle involving Oracle, PeopleSoft and the U.S. Department of Justice. An anonymous reader points to this article in the Financial Times, adding "Microsoft says the discussions were halted due to the complexity involved in the transaction and in integrating the two companies. A merger with SAP would be a profound break with previous Microsoft strategy, and would likely have raised eyebrows among regulators."

Comments

I cannot see how that's going to fly

[BigFire]

with the German anti-trust law, which are a wee bit more strigent than the US anti-trust law.

Too bad it didn't happen

[ErichTheWebGuy]

If it had happened, I think we might have seen Microsoft suffer the same fate as ma bell. Oh well, M$ will still have their day.

Re:Too bad it didn't happen

[Saeed al-Sahaf]

If it had happened, I think we might have seen Microsoft suffer the same fate as ma bell. Oh well, M$ will still have their day.

I'm not so sure of this. While the regulatory powers did not see fit to break up Microsoft in the last round, it seems unlikely that they would approve of acquisitions of the SAP type either. I think truthfully, Microsoft's acquisition tentacles are to some extent being held at bay for the time being. This, of course, does not prevent them from continuing to screw everyone with the technologies that they currently control.

Re:Too bad it didn't happen

[The Lynxpro]

"I think truthfully, Microsoft's acquisition tentacles are to some extent being held at bay for the time being. This, of course, does not prevent them from continuing to screw everyone with the technologies that they currently control."

And that's the problem with Microsoft. They either are downright stupid or suffer from massive hubris. They seriously need to split apart because although they apparently won the antitrust case (in the long run), their size and market strength is keeping each division from making decent acquisitions to keep them competitive with other companies.

Microsoft seriously needs to split into at least three companies, and dump MSN outright. One company would focus on operating systems and web services technology. The second company would do applications (Office) and business software (Great Plains). The third would be the videogame division.

Microsoft's size is curtailing the success of their videogame division. The Xbox division needs to acquire some large scale publishers and try to guarantee exclusives for the Xbox Next so they don't have to heavily subsidize each machine. Buying for example Activision, Atari (Infogrames), Midway, and UbiSoft would do just that (EA will stay independent). But if they did that currently, they'd be hit with another antitrust case.

Separating the company into three and splitting the booty of ill gotten gains evenly ($20 billion a piece since Microsoft has $60 billion now) woudl go a long way to shoring up the companies and jettison antitrust concerns. After all, we all know Microsoft Office needs to be released for the Linux platform, but as long as Microsoft stays in tact, this will not happen out of concern of jeopardizing the Windows monopoly.

Monopolies and mergers

[mrchaotica]

It seems pretty counterintuitive to me that a monopoly would be allowed to merge with anything, even a small company.

Bullshit

[Anonymous Coward]

Pure bullshit.

MS want ERP vendors to think they almost acquired SAP. Then ERP vendors will think wow that could be us. How can we make ourselves more attractive to MS for buyout. I know, we'll program a bunch of .net crap in.

This gets vendors to try to play extra nice with .net when the business market place has pretty much said J2EE is what we want.

Re:And it would have resulted

[lucabrasi999]

huge piece of bloat- (and until a couple of years ago vapor-) ware running on top of what is already purported to be bloatware

Of course, but is there an ERP package that isn't bloat-ware? The fact is that MS wants to get into the market and Bill has $50 billion burning a hole in his pocket. On first-look, it made sense for Bill to at least "kick the tires".

Has anyone noticed

[zymano]

That corporate mergers have increased(Peoplesoft&Oracle,Clearchannel) under the Bush administration and no one really cares until you turn on the Cnn/moneyline and notice that the corporations aren't hiring because of HIGH productivity by their businesses. Most hirings come from small business. To me mergers mean only one thing , an attempt to monopolize.

Too bad this didn't happen

[Anonymous Coward]

MS would have been tied up, defocused, defanged, and out of our hair for YEARS with this acquisition. Gates and Ballmer (unfortunately) were wise and disciplined to pass it up. Historically, most big-company mergers wind up losing value (witness Daimler-Chrysler, a $40B abortion). Still, it's a pleasant thought :-)

Not invented here

[sapbasisnerd]

Oh yea, that will work. Take the two companies in the industry most infected with 'not invented here' disease and try to put them together.

Does explain the SAPDB sale to MySQL a little more rationally though. That was one piece of baggage MS would not have tolerated.

I also suspect that WGIII and Uncle Fester took a hard look at the install base, evaluated their chances of actually converting some of the largest customers, overestimated it by at least double and still realized they'd be buying into supporting a product on competitive operating system platforms and databases for a basically a decade at least. Further noticed that many of these customers have ahem connections that they'd rather not mess with (it's rumoured that Haliburton is or was the largest single instance SAP system in the world, this appeared on a chart at one SAP conference and then disappeared for future appearances of the same presentation).

MS bought Navision instead

[/Wegge]

I've always had the impression that the policy from Remond was to find the "sweet spot" for their back office applications. In this case, the best target is probably a notch or two down from the customers who are willing to bay a SAP solution.

Whatever the reasons might be, MS in fact went ahead and bought Navision Financials instead, which probably was better for the overall backoffice strategy.

Wow. Microsoft is that big

[rainer_d]

Look at the market-capitalisation of SAP:

http://finance.yahoo.com/q?s=SAP:

Market Cap: 51.18B

It would have cost them all their cash, but they'd have bought a company that works very much against all the way different than MSFT:

• Linux is a Tier 1 platform for SAP
  
• as someone else pointed out, they have a large installed base on non-Win32 platforms that are just going to stay that way as long as the hardware works
  

Microsoft's SOP for merger "talks"

[runenfool]

This sounds like what Microsoft did with Intuit and some other companies who's names escape me right now (I believe Novell in the 80s was another). They send all sorts of people over to "investigate a merger", when in reality what they are doing is learning how you do business and who your key people are.

Perhaps this is what Microsoft's intent was with SAP?

Re:Mmm right...

[Maserati]

I was in software retail when MS MOney was launched to compete with Quicken. We had stacks of Quicken for $49.95 and stacks of MS Money for, ultimately, $5.00. We couldn't move MS Money at any price. People would walk right by the huge endcaps MS paid for to spend more on Quicken.

In a nice demonstration of the Law of Perceived Value, sales of MS Money fell off as the price went down. People figure that if it's marked down that heavily, then it must suck. Pretty much everyone who bought it at all paid at least $39.95 for it.

Then they tried to buy Intuit and the FTC raised an eyebrow.