Last May, I posted a response to a Randal Stross piece that I thought unfairly compared Apple and Sony stores. However, his Digital Domain piece today on how Microsoft should buy a large business software company such as SAP instead of taking on Google has me scratching my head.
Mr. Stross advocates that, rather than taking on a strong and nimble competitor such as Google, Microsoft should stick to its knitting and acquire a large software company such as SAP as opposed to another strong Web player such as Yahoo!, which one of his sources characterizes as “an old-style Internet access, in decline, and at a premium.”
This is like a trainer recommending that a boxer with a black eye lift more weights to improve his arms..Buying SAP may lead to further consolidation in Microsoft’s strongest market, but it does little to help it gain ground on the Internet advertising gold rush that Microsoft fears Google will use to launch applications that compete with its cash cows. Following Mr. Stross’s advice would effectively mean withdrawal from the online space. There’s a case for Microsoft spinning off that business, but for now Microsoft still sees the Web as its manifest destiny.
If Microsoft were to buy an enterprise vendor to address the Google threat, it should be salesforce.com. Such an acquisition would enable Microsoft to make a stronger foray in software-as-a-service. It could offer real applications to counter what Google might only hope to build one day under the pressure of an offering that is difficult to shoehorn into its free, consumer-focused, ad-driven model