Someone at either Microsoft or SAP is floating the rumor that the former may acquire the latter. As a rule, any such rumor is about as reliable as a rumor involving a baseball trade. If it has any substance, the deal takes place almost immediately after you hear the whispers; on the other hand, most major deals are completely unexpected.
But these rumors sometimes have more than a grain of truth to them. Microsoft and Yahoo did mull a possible deal last year, and we learned through documents released during the protracted legal battle surrounding the Oracle-PeopleSoft takeover that Microsoft and SAP have already had serious merger discussions.
A merger between SAP and Microsoft would make a lot of sense for both companies and, for a change, would benefit customers as well.
So how would it benefit the companies?
Well, the companies have already created integrations between parts of SAP's ERP suite on the back end with Microsoft Office products on the front end. This has helped Microsoft expand its hegemony over the desktop (and upsell customers on Office 2007) while helping SAP add to the number of seats it has sold to existing enterprise customers.
The companies also complement each other nicely, and could easily rationalize their respective low-end ERP suites, which are in a state of transition anyway, with both companies struggling to find their footing in the on-demand space.
SAP would give Microsoft an ERP product for the high end of the market, while helping SAP make deeper inroads with end users, whose experience it grasps more fully than SAP.
When companies acquire a partner of long-standing, you inevitably wonder why they bother merging rather than simply expanding their partnerships. But you can only go so far while remaining "just friends," and sometimes a merger is the only way to really get the benefits of synergies.
That's where the benefit to customers comes in. Both companies are mature, and they understand each other fairly well. That will spare customers from suffering through a long learning curve as the companies discover each other's products.
Microsoft, if it acquired SAP, would not only be unlikely to kill any of its existing products, it could conceivably help probably improve the usability of those tools.
Neither company is particularly good at meeting product release deadlines, so while that wouldn't improve, it's unlikely to create friction. And Microsoft product releases could stand a dose of SAP perfectionism.
It's still an unlikely eventuality, simply because we've heard so much about it. But if it happens, it could be one of the more successful tech mergers in recent memory.
[Eric Lundquist has just reported that SAP Henning Kagermann shot down this rumor at an SAP event he's attending in Boston. This rumor may fade away, but I'm guessing this isn't the last we've heard of it.]