In the days since a Bloomberg article let slip that Salesforce might be on the block, there has been no end of punditry regarding potential suitors.
Oracle is the most likely – except it’s not. Salesforce’s Benioff had lunch with Microsoft’s Nadella – only perhaps it was dinner. IBM, Amazon.com, or perhaps even SAP are in the mix. Only it’s not SAP. Apple anyone?
The more interesting question, however, isn’t who, it’s why. Oracle and Microsoft are looking to beef up cloud computing operations, according to a Reuters article. It certainly couldn’t be because Salesforce has a booming business, as it lost $263 million in 2014, with no turnaround in sight.
The Wall Street Journal is skeptical as well. A recent article focuses more on reasons not to acquire Salesforce than to actually make the deal. This article admits “there is little doubt that the cloud business is hot,” but still considers such a deal would be a “megasized software merger.”
Wait, what? Salesforce is a software company? For years they’ve been touting just the opposite – even going so far as to place their No Software logo front and center. And their phone number? 1-800-NO-SOFTWARE. Is Wall Street simply not listening?
The motivation for this no-software mantra, of course, is the fact that Salesforce runs in the cloud. Customers need not buy software when they use Salesforce, since they subscribe to Software-as-a-Service (SaaS) instead. It could even be argued that Salesforce invented SaaS.
The list of likely suitors, in contrast, are in large part software companies – with the sole exception of Amazon. Or at least, they were software companies, until the cloud upended their entire software business model. Oracle, IBM, Microsoft, and SAP are all in the midst of turbulent, cloud-driven transformations across their software lines of business (see my Forbes article on IBM’s transition).
The answer to the “why acquire Salesforce” question for these behemoths, therefore, goes something like this: cloud is transforming us, so by acquiring a cloud leader, we’ll be that much further along in our move to the cloud. Sounds good on the surface – except for one annoying fact. Salesforce is a software company, remember?
Read the entire article at http://www.forbes.com/sites/jasonbloomberg/2015/05/01/salesforce-acquisition-end-of-beginning-for-cloud/.
Intellyx advises companies on their digital transformation initiatives and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. Image credit: Jon Mountjoy.
