Satya Nadella seems set for his next big purchase -- and Microsoft has about $95 billion in cash. That is about Rs 600,000 crore! Reports came at the weekend that the software giant pulled back from acquiring Salesforce.com, arguably the biggest small-business software company located in the cloud (or the internet).
Microsoft is said to have stopped at $55 billion for Salesforce, while that company wanted $70 billion. A higher amount would have only increased the risk for Microsoft. But Salesforce is very much in synergy with its Office 365 initiative under which software used by small and medium businesses like the ubiquitous Microsoft Office suite and Outlook e-mail are on offer over the cloud.
It is clear that as bandwidth improves and cloud computing takes off, software will be rented and not purchased, and Salesforce.com is a pioneer in this field.
Rumours are also swirling that Microsoft is also eyeing BlackBerry --though one would not know really why. I think it is not for the handset brand as such. Microsoft's purchase of Nokia has not exactly been a great success but a good entry into the mobile market where it was hardly there. But BlackBerry has hidden strengths in enterprise security -- the business of encryption and other means through which corporate emails and data are kept safe confidential. This is very much in league with Microsoft's desire to offer safe, secure and easy cloud-based software.
Microsoft acquired video-calling service Skype for $8.5 billion in 2011 and failed to acquire Yahoo in 2008 for $45 billion. It has always had an appetite for big acquisitions if it is in line with its world-leading ambitions.
The time is ripe. US interest rates are at a historical low but set to start rising, which means you can borrow cheap to set the stage for a new wave of growth. The US economy is recovering and valuations may go up in better performing economies. Usually, this is the time when giants with a reputation to defend but whose old products have lost their sheen look for their next big, bold purchase.
Being Indian-born Nadella's moves would be of great interest here. A big acquisition would be a glamorous ramp walk to watch in the world of technology.