Microsoft Thought About SAP Buy

The software giant acknowledged in a statement Monday that it had talked with German software powerhouse SAP about buying that company.

Late last year, the two software heavyweights discussed a merger, but the talks were ended by Microsoft a few months ago "due to the complexity of the potential transaction," according to a statement by the Redmond, Wash.-based company. Microsoft also acknowledged that it initiated the talks.

This disclosure was made because relevant information was uncovered in the discovery process for the upcoming Oracle-PeopleSoft trial, Microsoft said. The U.S. Department of Justice has weighed in against Oracle's multibillion-dollar hostile bid for business application competitor PeopleSoft, and the trial is slated to get under way this week in San Francisco.

Microsoft's admission about talks to acquire SAP is sure to raise eyebrows throughout the industry. The company has said repeatedly that through its Microsoft Business Solutions (MBS) division--the result of its acquisitions of Great Plains and Navision--it was targeting small- and midsize-business customers and wouldn't take on the enterprise software giants like PeopleSoft, Siebel Systems and SAP directly.

But now, it appears that Microsoft's aims were somewhat more grandiose. In recent weeks, Microsoft executives have said that MBS applications also will find their way into enterprises at departmental levels. Doug Burgum, senior vice president at Microsoft and the head of MBS, discussed the company's business app strategy in an interview with CRN last week. And at the recent Tech Ed conference in San Diego, CEO Steve Ballmer outlined Microsoft's enterprise aspirations.

For Microsoft's message to partners about the failed deal see Microsoft web site.