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Microsoft Should Acquire SAP, Not Yahoo
Reservoir Hill writes "Randall Stross has an insightful article in the NY Times that says that if Microsoft thinks this is the right time to try a major acquisition on a scale it has never tried before, it should pursue not Yahoo but SAP, another major player in business software, thus merging Microsoft's strength with that of another. This is more likely to produce a happy outcome than yoking two ailing businesses, Yahoo's and Microsoft's own online offerings, and hoping for a miracle. Stross points to Oracle as a company whose acquisition strategy has picked up key products and customers while avoiding venturing too far from its core business, or overpaying. Stross recommends that Microsoft acquire SAP and leave it alone as an autonomous division — which would avoid a culture-clash integration fiasco. Besides, large enterprise customers are arguably the best customers a software company can have. A few dozen well-paying Fortune 500 customers may actually be more valuable than tens of millions of Web e-mail 'customers' who pay nothing for the service and whose attention is not highly valued by online advertisers."
SAP is already a nightmare, I can't imagine Microsoft expending serious efforts to roll it into the Windows Server platform. It'd be like watching a thousand train wrecks, again and again...
512 MB RAM, 20 GB disk, 200 GB transfer, five datacenters. $19.95/month.
Great point. However, it's worth mentioning that Microsoft isn't in all that much trouble from Google. They still have a virtual monopoly on the OS market, which means that the only real "threats" to Microsoft's main income source are sites like /. where people give information about and advocate the use of other operating systems.
Instead of paying dividends or buying back stock, let's overpay for companies and enrich investment bankers.
According to their Cash Flow Statement, they do pay dividends and they do buy back stock.
Google apps are a joke for the enterprise software market as well as any public company due to SOX, HIPAA and other laws. this article actually has a point
with Yahoo Microsoft is paying $40 billion for a bunch of web designers, some media contracts and other intellectual talent that can flee at any time and MS will have to keep the business going. Customers can flee to any competitor with a minimum of problems.
with SAP Microsoft will gain a product lineup with large customers that pay for service, can't migrate easily and SAP's product will have synergies with Microsoft's other products where they can sell more products to a customer.
and Google seems to be coming to the end of the current growth cycle. revenue and profit growth seems to have peaked, expenses are going up, they seem to be expanding to new areas that don't really make any sense to the core business, the new expansions don't seem to be #1 in their areas and Google doesn't seem to want to make them #1, Google's big thing is the search algorithm and the infrastructure behind it and they don't really own any data they return and the owners of the data may one day start to demand royalties or block Google from it like say blocking their site from Google News, funny things happen in recessions when businesses start looking under every rock from cash, a lot of Google's customers are small businesses and have a real chance of going under in a recession
How can Google kill them?
Google does not make operating system, dictate standards, or make make office software that runs 99% of all businesses.
I think Microsoft fears loss of control. Its silly and sorry Microsoft but Google IS THE STANDARD in search engine technology. Is that going to kill your business? Please
MS should be fear Google but not kill the Hen that lays the golden egg to do it. Wasting billions wont destroy a set standard. ITs going to be very very hard if not impossible. Otherwise Microsoft would have been unseated long ago.
http://saveie6.com/
Now which do you think is going to be a bigger growth industry:
A) OS sales as 3rd world countries develop
B) Internet advertising as 3rd world countries develop
Hint: Only one of these things does not require the copyright police to enforce your business model
[Fuck Beta]
o0t!
Wrong platform: SAP runs on all sorts of platforms. Short of gutting the customer base there's no way they'll ever push platform support purely onto a windows platform. If they don't make that change though, then you'll have a mircrosoft division (SAP) selling you a product that runs on a combination of Solaris and Oracle. Talk about a non starter.
Wrong business model: SAP is a platform, meaning you buy it and then spend millions of dollars and years of consulting to "customize" it to your organization's needs. It's about as far from shrink wrap as you can get. Microsoft has virtually no experience in this kind of enterprise software market.
Wrong culture: SAP is about as germanic as a firm can be and, in their own way, every bit as committed to global domination as Microsoft is (albeit in a different market space). Trying to integrate the two firms, even into a loose confederation like, say, GE or Mitsubishi, and expecting anything other than all out, internal, bureaucratic warfare is willful ignorance (or gross stupidity).
Google is working on number 3, is rapidly getting the necessary position to do number 2, and regards number 1 as irrelevant.
The article is very likely right, but I don't see it happening, because what drives Microsoft is not so much profit as control and being seen as top dog in the computer world. Even if it proved even more profitable than their current business, MS would not be happy ceding its dominant position in the personal computer world and becoming a backstage purveyor of business software and services. MS would be obsessed with Google even if there were no threat from network applications because Google has been much more successful in an arena visible to the average person.
The "benefits" of SAP are quite debatable. I'd say that's true for practically ALL of these "enterprise class" applications that try to tackle the problem of integration of incoming sales orders, corporate accounting, shipping, human resources, etc. etc.
It's "beneficial" for the consultants who get highly paid to train employees on how to use the software, and for the people who customize the software for each business that takes them up on a purchase. But beyond that, it's unclear that it's *really* an efficient, worthwhile solution.
From past experience, I've observed a trend where these companies (whether it's Oracle, SAP, or you name it) make big promises, a company "bites" (knowing that the problems outlined really ARE big issues they'd LOVE to solve), and then the vendor proceeds to bleed millions of dollars out of their new customer. Eventually, something is constructed/customized that accomplishes SOME of the original goals, but does so in a rather clunky, bug-infested manner, while other items on the "want list" get bumped to "future stages of implementation" (which often never really get completed, because they're too costly and complicated). By this time, upper level management is forced to cost-justify the monstrosity, so they do their best to keep their jobs (and pride) by praising the software as a "big improvement" or "big step towards greater efficiency". Vendor then makes sure to quote them on that, and moves to the next sucker... uh, I mean customer.
IMHO, as disappointing as most Microsoft products are, they built their empire on the exact OPPOSITE philosophy. They promised "relatively inexpensive, out of the box" solutions to problems. Microsoft has never been about customizing their software for individual clients while charging by hours spent on them, nor do they tie customers to "maintenance contracts". They simply develop applications they feel will appeal to the majority of PC users out there, and make corrections and additions as they go, largely based on the collective feedback they receive.
So sure, you have silly things like people running around in large numbers, waving their MCSE certifications, expecting they should command top salaries because of them. But it's probably no more "silly" than companies scrambling to hire "experienced SAP implementation specialists" - when in reality, it just means you have people who helped muddle through the process of selling the stuff to previous customers. (You have no idea if they've ever done any customization work relevant to YOUR company's specific needs.)
I think SAP is a poor fit. Yahoo fits Microsoft's needs. Microsoft wants to further entrench user lock-in to their company. Buying SAP gets them more income directly, perhaps, but that money coming from big companies who can demand flexibility or hire IBM and go open source if need be. What Microsoft wants is to get their claws into more users' online services, which can be tied to Windows and MS specific protocols and formats. Their greatest fear is that the Web will allow other companies to supply al a user's basic needs via the browser, meaning those users can buy a Linux box or an OS X box or a Solaris box or an iPhone or a Blackberry or anything that is not Windows.
MS doesn't need more revenue. Their users will continue to pay because they have no choice. MS has their data and their networks locked up and the expense of switching is too high. MS doesn't want Yahoo to get more revenue. Almost all Yahoo users are Windows users and MS already collects their tithes. MS wants Yahoo to make sure Yahoo users are not given a choice of migrating to being Yahoo/Linux users or Yahoo/MacOS users instead of Yahoo/Windows users. Further they want the lion's share of the market so that most people are locked in. Right now, between Google and Yahoo, most users are not locked in for their mail and messaging and calendaring and in a short time, perhaps their office suite and IM and internet phone and internet TV and whatever else becomes a Web service. If they have most users then they can use that to break compatibility with Google and so Google will have to waste time, effort, and money trying to reverse engineer all of their proprietary apps, to the point of having to screen scrape to get data back to an open and usable format (which they already had had to do to some degree).
In summary, MS wants to buy people so they can use their normal tactics instead of competing to create a better product. If they were interested in making money on their acquisitions they would not have bought dozens of game companies and created the XBox. They want a presence in the living room so they can lock in people even more. Once they have lock-in they can take all the money they wish from people for perpetual upgrades and fees, so long as they make the pain of getting away from them greater than the cost at any given time.
Only one of these things does not require the copyright police to enforce your business model
... the copyright attitude
And perhaps even more important
No. Microsoft Dynamics was originally Great Plains accounting software. The Great Plains are not European; neither was the accounting software. And Microsoft Dynamics is designed for medium-sized businesses, not gigantic transnational corporations like SAP is.
I wander why this is "mod +5 funny"
Are you saying they're missing something important that only Google has?
Google has brand name recognition, almost everyone with any exposure to computers will recognise Google. Only people familiar with Linux will know Ubuntu.
Okay, I understand that MS is hurting and they need to do something. My answer is MS research. You have the development labs. You have the cool ideas. Use them. INNOVATE DAMMIT. Google didn't get to this point by the standard merger philosophy. MS, you didn't get to where you are by stupid mergers and desperate acts. You got there by providing something that people wanted, in a better manner or for cheaper. Keep doing it. PUSH the boundaries of what you're doing. Yeah, it's higher risk. But the reward is higher. You get the revenue, the soft benefit of everyone loving your company vs everyone hating it. You'll avoid the monopoly claims because you won't be a monopoly. The only downside is higher risk. You have the cash to offset that. Use it.
Oh, really? Sworn to never run core business components on a Microsoft platform? I doubt there are very many companies out there like that of the appreciable size necessary to run and get benefits out of running SAP. If Microsoft turns out to have the best platform for what you need to run, then you run a Microsoft platform.
What's more interesting is what happens to SAP's consultancy if Microsoft were to take over. There is a large percentage of SAP employees out there already who are less than enamored at all the cuts to their benefits and pay that they've had to endure since the tech boom. I know one woman who worked on the HR module who was getting billed out at 1300 dollars an hour. Another fellow who was pretty much the lead on developing the module left the tech world altogether to become a chef.
I'm not so sure. MSFT is going into a rather huge debt, and for the first time in its history... just to buy Yahoo. It'll take more than a couple of years to pay that off... unless they can turn a ~90% desktop share into a 150% one.
Now eventually they can, but I'd give it about five years before their budge3t can take that kind of hit, at least at the rate things are going for them. Problem is, five years is almost an eternity in this industry, and a whole bucketload of things can happen between here and there.
Quo usque tandem abutere, Nimbus, patientia nostra?
It's not the threat of a Google OS (or any other OS) becoming a better product than Windows. The real threat is that the OS is becoming fairly irrelevant as a marketable product because the move to applications on the web (as opposed to the desktop) makes the question of OS choice moot (just choose the cheapest one).
If everything I use is in the browser I really don't care what OS I'm using, just as long as it 'runs' the web. Microsoft is risking irrelevance by not having a major a web platform. An acquisition of Yahoo would give them that (though personally I don't think it's enough).
actually I work a lot with business students, and (at least in academic circles in Vienna) it's different (from my POV): most people ask me, if I boot my laptop in front of them*, if I am using that "ubuntu thing". Some of them never heard linux before, or just read it somewhere as a word. but many more seem to know ubuntu!
;)
I also have to do with a lot of students from the states, or different countries (since vienna business school is one major destination for most exchange students in the business sector) and I also experienced this a lot with them.
It was a topic not long ago with colleagues, and they shared the same experience. we were all together puzzled about this phenomenon.
my conclusion: ubuntu is in fact a very well known word in the world. also mostly for non-linux-users. and I thought otherwise. maybe it is only the experience we had from other words (alongsided with some disappointment) like linux, which leads us to the conclusion, that nobody knows "this or that", so we might not emphasize the true spreading of some special vocabulary
it is however of course not that famous as google.
and of course we will never know for sure, but somebody feel free to make a study about it, it is a good theme for a diploma
*) Yeah, posing in a nerd stylish way of course.
NetWare 3 was painful to the extreme. It would require you to set up a dedicated server just for sharing files and, IIRC, the machines that shared the printers took a very heavy performance hit. That and the NLM way of deploying server software made NW3 the worst thing I ever saw in server software. Of course, these were because of the compromises derived from running it on crippled computers. The catch is that it was too complex and expensive for small offices that only wanted to work smarter.
WfW mirrored the simple networking of the Macs of the time, but I am not sure it could be called a copy - it used some of the same code and protocols LAN Manager used. Besides that, it allowed people not to fork out the big bucks it would cost to migrate to Macs.
Architecturally, LAN Manager was vastly superior to NetWare 3 because if offered an environment with real multitasking, memory protection and central authentication. Windows NT grew out of this structure. It's useful to remember that OS/2 and NT performed better and were much less expensive than comparable Unix solutions running on the same hardware.
It's then unfair to say that WfW only succeeded because it sucked less. It was a good product for its time and filled a niche (the "we need a network without throwing away our current computers and programs" one) that needed filling badly.
http://www.dieblinkenlights.com
What are Microsoft's two biggest cash cows:
Office. What's the lock-in/network effects here? The office file format, ubiquity, and the UI. Google wants to take over this space, not that they want to sell office apps, but they want the docs to be more under their control, both with an open standard (which violates the office format lockin) and be able to see more docs (google docs). The best part for Google is, they don't even need to have the best app available. They just want the open format, and google doc part. Want to sue Writely? go ahead. Want to use openOffice? hey, we got a nice plug in for you. One Google gears goes ahead, google docs will be even more transparent. Office is in for a fight here. It won't be tomorrow, but it will slowly kill office dominance, and i feel microsoft knows it. As first in this thread said, SAP won't fix this.
The OS itself. What is an OS? it allows you to do things. It controls local storage. Hmm, writely and google docs obviates some of the need for this. What do most people use this for? Web browsing (firefox homepage, google plug in, google gears, google toolbar, google browser sync, gspace), email (gmail) and office style apps (writely et al.). If you strip away the geek terms for an os (direct control over drivers, kernel space vs user space) and just talk about what and end user finds useful, we already have close to a google os - it just happens to be an overlay on whatever os you have. Google already has an OS, it's kernel is Firefox, and it can work for a large subset of the population.
I dont think they will and I don't think they have to. If they can move productivity apps off of the desktop and onto the web then a large part of Microsoft's monopoly falls apart. If the stuff that 90% of users do on the web can be done on any internet enabled machine, even an iPhone, then all that matters is the other 10% of what you want to do.
Sure, that stuff will still be OS dependent but most people never do that stuff anyway and the ones that do can choose the platform they want for it. You want to edit videos, maybe you buy a mac, you don't have to worry about all your other applications being incompatible with your windows friends because all your productivity apps are from google and work just fine in firefox on the mac or windows or linux.
Its not so much the OS that gives MS its strength, its the application platform. If applications migrate to a new platform (the web) Microsoft's strength is reduced.
Now I'm not convinced that buying Yahoo could help them with this problem, but I don't see how SAP is going to help them out any.
"In America, first you get the sugar, then you get the power, then you get the women..." -H. Simpson