It has emerged that Microsoft and SAP held discussions to merge last year.
Microsoft and SAP’s merger talks were ended a few months ago when it was decided that the potential transaction and subsequent integration would be too complex. However, something concrete did come out of the discussions, as the two vendors entered a broad-ranging joint development partnership around web services and a patent cross-licensing agreement.
At the trial, Oracle is expected to argue that fundamental change is underway and also that Microsoft is trying to outflank it, as is IBM. Presumably the discussions between Microsoft and SAP will be used to illustrate those points. Oracle is also expected to argue that the DoJ has taken too narrow a view of the enterprise applications marketplace when assessing whether its bid to buy PeopleSoft is anti-competitive, failing to look at the proposed merger in the context of the big picture and developing trends that will play out over the next several years.
Although Microsoft and SAP’s discussions came to nothing, they raise questions about the future of the enterprise software market. Application vendors such as SAP are heading deep into the area of application integration with packaged integration platforms, challenging the likes of Microsoft and particularly IBM and BEA Systems. The prospect of two giants merging would have had serious implications for customers, and given the status of both vendors, it would effectively have set the seal on the development environment of the future.
It also raises a question about Microsoft’s recent declaration that it has no intention of moving into the large enterprise applications market for at least two years. No doubt the talks were ended before Microsoft made its statement, but it will reignite question over when Microsoft will head up market.
These talks might have come to nothing, but they highlight the movement within the enterprise space, and suggest that deep-reaching changes are bubbling under the surface.
