In Depth: What would happen if Microsoft bought Salesforce?

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The rumor-mill is in overdrive as speculation continues about Microsoft’s supposed intention to acquire Salesforce. To recap, last week Bloomberg reported that Salesforce, the most popular, fastest growing and perhaps most powerful CRM tool on the planet, has been approached with an acquisition offer that was serious enough to motivate the company to work with financial advisors to consider the option.

You probably have heard that Microsoft, the world's largest software company, may make a bid to acquire the CRM giant.

Assuming a Microsoft bid for Salesforce.com is on the table - Microsoft has firmly denied that one is - it would make a ton of sense as the software company’s CEO Satya Nadella would solidify Microsoft’s position in cloud and mobile computing, where he is already focusing much of the company’s attention and seeking to lessen the company’s focus on the declining personal computer industry. A year ago, Microsoft and Salesforce worked out a deal that allows customers to access Salesforce.com and run operations from Windows-based systems and devices.

The marriage between the two companies would easily create the biggest acquisition in enterprise software history. It's like getting the best of both worlds.

The cloud

The cloud is clearly where Microsoft is investing for the future of its business, so a union would grow its offerings and help plug a lot of holes by acquiring an army of cloud coders and give a clear advantage in the cloud battle. The battle in cloud is not as much about who can provide the cloud infrastructure - the Infrastructure as a Service (IaaS) - but who can build out their cloud offerings to more than just the virtual machines delivered through the Microsoft Azure platform. And this is where Salesforce comes into play.

It's this thinking that has made Salesforce the more than $5 billion, cloud-based CRM company that it is. The Salesforce platform is one of the fastest growing enterprise IT platforms by all measures - number of transactions, number of customers, number of developers, and number of apps. Microsoft is good at building developer tools, and if the company marries those with Salesforce’s cloud platform it could be a way for Microsoft to transition the millions of .NET developers into the cloud world. A purchase of Salesforce would secure the future of this initiative almost entirely and allow Microsoft to focus their efforts on building Azure's reputation in the cloud market.

What’s more, integrating Salesforce natively with Microsoft’s productivity tools, Outlook and Office, and its own CRM tool, Dynamics CRM, would provide Microsoft with a highly personalized CRM integrated with your emails and calendars. This intersection of tools would solidify Exchange’s position in the email world and guard against Gmail’s advancements while also improving Microsoft’s CRM positioning. With Apple giving away Mac OS and the productivity apps and Google selling Google Apps for next to nothing, the market is in a race to the bottom.

Take Microsoft’s core strategy, Office 365 and Windows, and think about integrating it with Salesforce’s core strategy, CRM apps, and making a combined offering that offers more value to all users. Outlook is already an amazing platform for e-mail and correspondence, plus the power of Salesforce integration will mean keeping track of your tasks seamlessly. Imagine getting custom data, graphs, pivots, etc. in Excel sheets and then having that data funneling automatically back and forth between your CRM system. A Salesforce cloud integration with OneDrive can bring CRM in a snap of our fingers on all devices across all tools with one unified technology. Unifying the product offering by creating integration into various other Microsoft products, and offering bulk licensing discounts in conjunction with Azure, Windows Enterprise, and various other software-as-a-service products could give Microsoft added leverage to gain a significant market position in various software verticals.

It would also play to Microsoft’s traditional strength as an enterprise technology provider, further distancing the company from rivals such as Apple and Google. They're both commodity providers of software, and only Microsoft and a few other companies are really proficient at direct software monetization. Microsoft needs to build out this moat even further by reducing the number of competitors with which it has to compete.

Next phase of the mobile revolution

Additionally, Salesforce has become the leading force in enterprise technology in the wearables and machine-to-machine space. There is plenty of room for exploration by Microsoft and opportunities for development as wearables in the enterprise are a large, untapped market segment in military, law enforcement, EMS, healthcare, maintenance, assembly, design, and transportation.

The potential buyout will open up new opportunities for wearable app development, as the Salesforce Wear Developer Pack is already a frontrunner in open source starter apps, including reference applications, tools, and codes for developing wearable business processes that can connect to the cloud-based Salesforce1 Platform. For example, ShiftExpert by ClickSoftware, is a native Salesforce1 Mobile ready app that works with Android smartphones to allow employees to automatically clock in and out of work, and then the app incorporates that data into a digital timesheet.

A union with Microsoft could give the two companies the leading device and reporting mechanism by integrating Microsoft Band and Hololens with Salesforce's data and analytics tools. Imagine how much easier training and collaboration could be if you are able to project a holographic image into your workspace through an augmented reality (AR) interface. Among the technology's potential applications is the ability for offsite trainers to show employees how to work through complex tasks by projecting instructions over the real life projects from their glasses.

If Microsoft hammers out a deal, the company stands to gain an army of cloud experts, a major foothold in the San Francisco tech recruiting market, and some of the most popular tools businesses use to manage customer relationships in the cloud.

Microsoft, valued at $385 billion, has already notched two major tech deals in recent years. In September 2013, Microsoft announced it would acquire Nokia's handset business for $7 billion. Last September, Microsoft scooped up the video game franchise Minecraft for $2.5 billion. With Salesforce's market value estimated at $50 billion, a potential acquisition would likely make history.

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