Steve Ballmer's getting a lot of (unsolicited) advice these days about what Microsoft ought to do. You can find one of the more thoughtful contributions in this morning's New York Times. Check out Randall Stross's piece in the Times, where he quotes MIT professor Michael Cusumano, warning against acquiring an "old-style Internet asset, in decline, and at a premium."
Instead, Cusamano makes offers an intriguing alternative: forget about Yahoo and go after SAP.
"It's not an outlandish idea. The two companies held merger talks in late 2003, and perhaps since then, too. Microsoft is in an enviable position: it is a nearly universal presence in corporate data centers, and large enterprise customers are arguably the best customers a software company can have. Clients pay very dear prices for the complex, semicustomized software that runs their business. And once they've got their systems running--a process that can take years to complete--they aren't inclined to change vendors lightly.
"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."
No doubt Larry Ellison would speed-dial government regulators the moment any such announcement hit the wires. Since the busting of the Internet bubble, Oracle has reconfigured itself through a relentless acquisition strategy of its own. Most of the credit should go to Ellison lieutenants Charles Phillips and Safra Katz. They've spent billions, but the deals all have made sense.
Watching from the sidelines, you have to believe that Phillips, Katz, and Ellison are cheering for the Yahoo deal to succeed. Like Cusamano, they understand that a Microsoft-SAP hook-up would be bad news in bells. I'm sure they hope Ballmer is too busy for now to read the latest business section of the "Gray Lady."