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Monday, June 7, 2004

MS can't stomach SAP

"The unspeakable in pursuit of the uneatable" was Oscar Wilde's celebrated description of foxhunting, but it might just as well apply to today's news that Microsoft considered acquiring SAP last year.

The two companies discussed a possible merger but Microsoft came to the conclusion that it would be too difficult to completely digest the German enterprise software vendor. Instead, the two companies agreed to co-operate on integration using web services. Perhaps this outcome sheds further light on the content of discussions between former high-school contemporaries, Microsoft CEO Steve Ballmer and Sun's Scott McNealy, which also ended in an agreement to settle differences and work on integrating their respective products. Obviously Ballmer believes that a big acquisition is something that Microsoft needs to add some spice to his leadership of the company, although this kind of thing always reminds me of former Intel CEO Andy Grove's warning that throwing a lot of energy into big mergers is often a way of avoiding confronting a company's true strategic challenges.

Ironically, all this has come out because of Oracle's equally pythonic wish to feast on PeopleSoft. Apparently Oracle was planning to cite the Microsoft-SAP discussions to support its contention that it has to swallow its rival in order to defend its increasingly fragile market position (or some such argument).

Do these companies honestly believe that such digestive feats are going to endear them to their customers? They may bolster corporate egos, but I can't imagine that any customer expects better products or service as a result of these mega-mergers. The very idea that such acts of corporate gluttony are being considered speaks of a nauseous malaise at the top table of enterprise software.

posted by Phil Wainewright 10:32 AM (GMT) | comments | link

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