If you’re anything like us, your world revolves around Iaas and Salesforce, and you’ve come to accept acquisitions as a regular marker of the ecosystem’s growth. So when news of acquiring the entire Infrastructure rolls around, it’s okay to feel jolted like the rest of us – like that one time in 2015.
Recently though, in a very forward statement, RBC Capital markets, an equity research firm indicated in its outlook that hints at a 250B dollar buyout of Salesforce, causing quite the stir.
The prediction comes against the backdrop of estimates put out by Gartner that peg Google’s cloud usage to be just 4%, besides the finance firm Goldman Sachs further reporting a slight decline in usage. Given that nothing came of the rumored Microsoft deal, there’s been understandable skepticism.
But there’s also the fact that the rumored acquisition sum was 70% than market cap, making this a sizable proposition.
Ambitious Goal-setting
The backstory to this is that towards the end of 2019, Google expressed publicly, its ambitions to developers to boost market presence past AWS and Microsoft Azure. It sparked speculation of yet another acquisition attempt, perhaps Google’s biggest to date, to take in Salesforce.
Google’s ex-Oracle hire, and cloud division CEO, SVP Thomas Kurian announced a five-year goal to rise to at least the number two cloud spot.
At present, this feels like the only viable option for the giant to scale its business up from the very thin slice of roughly 4 % occupied by it, instead of going through the process of nurturing its own homegrown cloud. (Although, RBC Capital does mention in a side note that this too could spin itself to a valuation upward of 200B).
To add to this, Google could package its own AI advancements with already popular CRM offerings. It could offer unmatched gains and integrated, internet first operations to the table.
But why now though?
As it stands today, Google has fallen behind rivals AWS and Microsoft in Datacentre numbers. Technology and adoption in this key sector are vitals more businesses rethink subscription models.
Salesforce has for long been, a jumping-off point from on-site tech to the cloud for businesses world over. All while also driving the shift to CRM adoption most prominently.
Some Skepticism
The Product and the Ecosystem
For one thing, Google will need to make significant efforts to keep Trailblazers happy, and its famed Ohana culture intact. Then, it’ll also need to keep the best Salesforce talent and contributors happy.
Furthermore, there are the fates of top rung management to think of. Add to that any roadmaps to and expansions for Salesforce, and Appexchange and the acquisition starts to become work
Microsoft’s Contract moves could spell stiff competition
Microsoft has maintained a steady pace to amass sizable government and defense contracts to its advantage, to solidify its position.
Even with an acquisition of this magnitude, the 250B tradeoff has its skeptics.
For some important customers like the defense industry, the acquisition might be a little later than desired. This isn’t to say that Google hasn’t enjoyed its share of success in this space. It’s amassed large volumes of the workload from these segments for other products.
This also comes at a time when numbers for executive-level adoption also lean toward Azure.
Android-like enterprise store
Its intertwined enterprise solutions and cloud architecture set Salesforce to stand apart as an enterprise, CRM-based cloud ecosystem. Getting an entire client-base to depend on any new changes to the ecosystem will need a fair bit of convincing.
Too Soon To Say?
Salesforce has for long been, the most successful and promising cloud-only application company that we know and love. So whether or not a buy-off is on the cards is anyone’s guess.
All the same, at near 250B, if the acquisition does get through, it’ll go down in history as the heftiest tech acquisition ever known. Even out sizing the 106B Time-Warner paid for the instant messaging platform AOL, way back in 2001.
