Microsoft could sell

By Larry Dignan  |  Posted 2004-06-08 Print this article Print

more servers to large enterprises "> According to Pacific Growth Equities analyst Brendan Barnicle, Microsofts pact with SAP could allow the Redmond software company to sell more servers in the very large enterprise arena, where companies count their revenue in billions of dollars a year. So far, Microsoft has been strongest with smaller companies.

AMR analyst Eric Austvold says the move could undercut Microsoft. He sees the buddy routine with SAP as a bow to the open-source movement. "This relationship is good for SAP and its customers, but its a potentially tricky one for Microsoft," says Austvold.

SAP could use Microsoft to put more of its applications on employee desktops, says Austvold. That would make it hard for Microsoft to put its own enterprise-class applications there or to gain adherents.

Then, if Linux or another "free" operating system gains ground, SAP stays in place—while Microsoft fades.

SAP applications reside on 10 percent to 15 percent of desktops during a deployment, says Austvold, adding that SAP could use Microsoft to boost that share to 50 percent in a few years. If Linux and other open-source software gain more momentum, SAP s NetWeaver platform, based on Java 2 Enterprise Edition architecture, could boot Microsoft in some places.

SAP is also scoring allies in the hardware arena. Click here to read more. For now, the companies dont expect any conflicts.

"We dont control the customer; the customer controls us," says Shai Agassi, a member of the SAP executive board. "Its ludicrous to think Chevron [an SAP customer] would buy a word processor from me. Its also ludicrous to think Chevron would buy its enterprise software from Microsoft."

When asked whether there could be future deals between SAP and Microsoft—including a merger to lock down the enterprise and the desktop—Agassi noted a deal would never pass regulator scrutiny. "Lets make the case that were not stupid," Agassi says. " We couldnt go out and buy J.D. Edwards or PeopleSoft either."

Tom Steinert-Threlkeld contributed to this report.

Check out eWEEK.coms Desktop & Notebook Center at for the latest news in desktop and notebook computing.

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

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