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Mon, May 5, 2008 16:26 EDT

Just Forget About Yahoo, Microsoft, and Go After SAP

Topic: Partner/Vendor Management

Blog: Web 2.0 Advisor

Current Rating: 4 Comments: 3

Microsoft spent three months officially wooing Yahoo and ended up with nothing but a big, fat rejection for all its overtures, financial enticements and grand plans. In fact, one news account of the saga termed the negotiation process between Yahoo and Microsoft, when there actually were talks between the two, as "bizarre."

So, I say this to you, Microsoft: Shed no tears over what could have been with that Yahoo girl. Leave her behind and let her figure out her business future on her own. (And if you want, enjoy some measure of schadenfreude as Yahoo's share price heads downward, as it did on Monday, May 5, after Microsoft withdrew its bid over the weekend.)

Sure, it would have created a sexy and cool brand and given you credibility and new opportunities in the online advertising and Web 2.0 markets. But what's done is done. The pretty girl at the dance turned you down, despite the $47.5 billion dowry you dangled in front of her.

So, let's get "unsexy" for a moment, Microsoft.

Standing off in the corner, seemingly half a world away, is a very mature, very confident and very robust German girl named "SAP."

That's right, SAP. Combining SAP's breadth of software suites and depth of industry-specific applications with Microsoft's near ubiquity on the desktop (as well as its more recent forays into enterprise offerings), would make one killer technology vendor. A one-stop-shop, if you will, for businesses and IT managers who long for consolidated and harmonious systems.

A recent article on CIO.com praised a long-despised rival of Microsoft's and how it went about its acquisitions: Oracle. In fact, Oracle's M&A strategy over the years has drawn some acclaim for the decidedly unsexy acquisitions it has made—and, more importantly, the impressive returns derived from those investments.

Quoted in the article were a couple of professors who noted that Oracle executives have displayed remarkable consistency in their M&A approach and rate of success. Namely, that Oracle seems to avoid costly mistakes and never strays from its product lines. And unlike Microsoft in its pursuit of Yahoo, Oracle always gets its prey.

"With impressive regularity...Oracle has picked up key products and customers while avoiding an 'oops' slip, venturing too far away from its core business, or paying too much," wrote Randall Stross, a professor of business at San Jose State University, in the March article. "At no point along the way has it acted in a fit of desperation."

A fit of desperation was what Stross and Michael Cusumano, a professor at MIT's Sloan School of Management who is quoted in Stross's article, implied Microsoft was doing in going after Yahoo. Both Stross and Cusumano noted in the article that Microsoft should go after SAP instead, which is a move, they contend, that would be more in line with Oracle's M&A strategy.

"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," Stross wrote in the article.

With a suggestion that could send Microsoft Chairman Bill Gates and President Steve Ballmer into fits of rage, Stross suggested that Microsoft execs should ask themselves "What would Larry do?" (as in, Oracle Chairman Larry Ellison) to determine the best acquisition strategy.

"You have to admire Oracle’s ability to remain focused on the business that serves business," Stross concluded, "and to not be distracted by

You do not have flash or javascript support.
Average (2 votes)
4
 
 
Tue, May 6, 2008 13:02 EDT
Anonymous user
Posted by: junger8
Rating: 10

A purchase of SAP would push Microsoft in a different direction than a purchase of Yahoo. So I think to compare the two would be apples and oranges. What is a fact is that Microsoft has thrown away millions of dollars to try and get into the internet search-engine advertising business with no success. If anyone has been around the internet since the mid-90's they would remember that MS bought Link Exchange to add on to their MSN family. Link Exchange was purchased at $250 million and no longer more than a fowarding URL for their Microsoft Live Office offering. Link Exchange used to provide the ability of one webmaster to find other webmasters to exchange links on their websites. Google and Yahoo now views Link Exchanges as spam and lowers a pages ranking that would have participated in an exchange, thus Microsoft's investment would be useless.

Does this deter Microsoft? No, they just made an $115 Million purchase on 4/21 for Farecast.com, a travel search startup that predicts airfare costs, this means more eyeballs for their internet advertising needs.

It may very well be that the year 2008 becomes a time where creative individuals will attempt to build a startup only for the purposes of selling to either Google or Microsoft as the two corporate giants attempt to battle it out for the search advertising market.

 
Wed, May 7, 2008 8:57 EDT
Anonymous user
Posted by: Anonymous
Rating:

Not a bad idea. Microsoft is Business Software - even if the world uses it for fun...most businesses in this world are using MS products to communicate, document, archive, and present. Businesses today need a completely seamless "unified" if you will, offering. The ERP software we use shouldn't need middleware (software), middle hardware, Middleware (databases)... the costs are high and the complexity is higher. Come on Microsoft - jump in the real game and give us a SaaS offering that will change the way most backoffice business is done. We want to keep our Exchange and Sharepoint servers, we want to continue to use outlook and Word and Excel... we just want our ERP package to use them too. This could avoid a whole set of programs to help make all the interfaces half-a@& work.

Focus on doing one thing really well and take over the market..Our Y2K installations are aging and they need to be replaced with a SaaS offering to simplify everything. Oracle cannot make that happen without a customer purchasing 25 different products and over a million dollars to put it all together. Purchase after purchase by Oracle has only added to the ultimate complexity. Give us SMB customers (under $600MM) an out of the box SaaS solution that does manufacturing and distribution. MS currently does have some really low end offerings...SAP would be the Bow on the present that we SMB's really want for Christmas!

 
Fri, May 9, 2008 4:13 EDT
Anonymous user
Posted by: Anonymous
Rating:

SAP - and to some extend Oracle - is not an ERP system (anymore). They offer a toolbox from which - with some expert knowledge - business processes can be modeled in computers (Interestingly ERP applications could be seen as THE virtual world with the most interfaces between "realitiy" and "virtuality"). They also come with a set of templates and there is an abundance of people there who have experience in creating scenarios.

SAP is not particularly "sexy" - it's more function over form - which at times gives them some problems. And it comes from an "engineering culture" - sometimes being over-engineered.

Microsoft is the dominant player in the consumer market for OS's, "office applications" and email - the "e-commodities". Their culture is is rather different - rather form over function. Things have to be sexy.

Do you remember what happened to Daimler-Chrysler? Want to repeat that? The minute MS buys SAP the clock will start ticking for the German girl - and the question will be whether a divorce will come early enough to save her life.

My 2 cs.

Wolf

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C.G. Lynch chronicles what matters (and what doesn't) in the world of social networking, Web 2.0 and consumer applications.

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