Should Microsoft buy Salesforce.com?
Think about it: Microsoft's in a bit of a funk these days and, in the category of broad-based enterprise players, is in danger of being relegated to second-tier status behind Oracle and SAP. It's also been outflanked in high-impact specialty areas such as virtualization by VMware, and business analytics by SAS and others, and enterprise search by Autonomy. Meanwhile, Google presents more threats on multiple strategic fronts from personal apps to enterprise search to the Android operating system, and IBM is making a full-frontal assault on cloud computing and business analytics.
Look at the big buzz surrounding Microsoft right now: It's around the potential of an upcoming operating system, Windows 7, and the company's efforts to gloss over the Vista disaster; in today's parlance, to "move on."
On the flip side, I've long been impressed with Salesforce and Marc Benioff's creation of a billion-dollar enterprise software company with a breakthrough business model: software as a service. Or in Benioff's parlance, "Solutions, not software." But no matter how you slice the numbers and parse the financials, Salesforce is challenged by the limits of the on-demand CRM market: Is there enough there there for Salesforce to achieve true escape velocity to sustained long-term growth and profitability while competing with larger and better-known enterprise software companies with broad product portfolios and rapidly improving Web-centric capabilities?
So maybe Microsoft and Salesforce could each be very good for what ails the other: one thrashing around a bit as it looks to redefine -- or just define? -- itself in the midst of significant changes in the industry, and one that's elegantly defined but tightly constrained.
Indeed, should Microsoft acquire Salesforce.com? Let's look at it from a few different points of view.
Marc Benioff would probably answer, "Hell no. HELL no."
Steve Ballmer might answer, "Money's not an issue, we could use the psychological juice in the marketplace, and we could sure use the cloud-computing technical expertise. But -- would the multiple advantages outweigh the culture wars with customers and employees that I'd have to deal with? Could we make the integration work?"
Shareholders would probably like it -- a combination of the global economic downturn and ongoing questions about Salesforce's ability to maintain anything close to its current growth levels are putting lots of pressure on its stock price. And one more very big thing for shareholders of both companies to think about: archcompetitor Oracle and its rapidly accelerating commitment to cloud computing, plus SAP's less-urgent but inevitable well-prepared assault on that burgeoning market.
Salesforce's customers would probably welcome the many good things Microsoft could offer -- scale, product breadth, some vertical-market expertise, and unquestionable long-term stability -- while also being quite leery of some of the potentially not-so-good things that could flow in Microsoft's wake: a dilution of the SaaS model, forced packaging of product extensions, and questionable support of the Force.com platform.
Microsoft's customers would have to like the influx from Salesforce of more product and platform options, more focus on forward-looking and Web-based platforms, and new thinking and expertise in the SaaS and cloud categories. They'd probably be concerned that Microsoft would buy that innovative set of capabilities but then not be able or willing to give it a fair shot in the marketplace, resulting in Microsoft quietly putting Salesforce's products, philosophies, and people on a slow boat to irrelevance. Conversely, they'd accept that risk if they felt it were much more likely that Microsoft would be willing to fully leverage and exploit that accelerated set of technologies, philosophies, and shared customer experiences from which to learn.
