Global CIO: Should Microsoft Buy Salesforce.com?Global CIO: Should Microsoft Buy Salesforce.com?

2) Benioff has made it a custom in his quarterly earnings calls with analysts to emphasize -- sometimes quite pointedly, although less so recently -- Salesforce's wins over those three competitors. In his earnings call last month, Benioff said that a huge customer deal with Japanese insurance giant Sompo is "a dramatic example of our ability to win in accounts that are dominated by Oracle and Microsoft." He also cited head-to-head CRM wins against Microsoft at Western Union, Booz Allen Hamilton, Singapore Airport, and others. While impressive, that account didn't include anecdotes where Microsoft and/or Oracle got the deals over Salesforce, and that competitive situation takes on great new significance in the context of Salesforce's unprecedented year-over-year decrease in new-business signings.

3) Benioff's vision and leadership in creating a $1.2 billion global software company is a great achievement, but the larger question today is the ability of him and his company to continue dominating the market for cloud-based CRM wins. Up until a couple of years ago, when Microsoft and Oracle were still fumbling with their cloud strategies and approaches and even basic terminology, Salesforce was absolutely dominating a narrow but significant niche. But the competitive landscape has changed dramatically here in mid-2009, and Oracle and Microsoft are much more disciplined and aggressive in their cloud computing strategies and execution. Microsoft is rapidly building out its "online" brand of business applications -- Exchange, Office Communications, SharePoint, and its own CRM offering -- and expects half of its revenue from those former software-only apps to come from the SaaS model by 2013. Will the advance of those two giants trap Salesforce in a no-man's-land as a relatively big and successful player in a small territory that customers are regarding as flyover land as they pursue larger suites of integrated cloud applications?

4) More and more competitors are starting to hammer Salesforce as being a big but severely limited cloud specialist with the limitation being its ultraspecialized role in CRM. As CIOs continue to move away from siloed apps and create integrated global intelligence hubs that encompass supply chain with ERP with demand chain with financials filtered through business analytics, will Salesforce continue to be able to stand alone as a big but increasingly isolated supplier of best-of-breed CRM solutions?

5) Benioff and Salesforce could provide Microsoft with a jolt of some very special medicine that reinvigorates the giant company that Windows built and gives it new technologies, new tools, and, most importantly, new outlooks on what customers expect, want, and need. Benioff invented the phrase "Solutions, Not Software" as proof that he saw the world from the perspective of Salesforce's customers. Microsoft, however, is still viewed by many customers and partners as believing that the one answer to every question is "more software." So an acquisition by Microsoft could be pursued not as a surrender but as a huge opportunity to leverage Salesforce's 10 years of innovation and success within a global franchise that is stumbling a bit and in need of an infusion of energy, vision, and approach.

And one final thought based on the upheaval taking place in the overall IT industry in the past year or so: While there are still some narrowly stratified and strategic IT vendors, there are hardly any BIG narrowly stratified and strategic IT vendors. As I wrote about recently, the days of outstanding but narrowly focused breakthrough leaders in this business are over; take a look:

-- Cisco's no longer just a networking vendor or a networking plus security vendor; it's rapidly becoming a full-line provider of end-to-end IT infrastructure.

-- Hewlett Packard's acquisition of EDS makes it a global power in services, it still has its traditional hardware and networking businesses, and it's also built a software business with billions of dollars in revenue.

-- IBM, as noted recently, is a hardware player only in key areas with high growth and high margins, and is now primarily a software, services, and financing company.

-- Oracle, with its acquisition of Sun, is now fully into hardware and operating systems. In such a context it's hard to imagine Salesforce remaining defiantly independent with its world-class yet limited set of products and technologies. And it's equally hard to imagine Microsoft remaining stuck in its midlife identity crisis, pining for the good old days when customers would line up outside of retail stores 48 hours in advance to buy copies of its new PC operating system, or being content with a decent set of ERP solutions for midsize and small companies, or sitting by placidly as competitors steal the march on strategic future markets in cloud computing, business analytics, and virtualization, and mobile applications.

So should Microsoft buy Salesforce? Oh, you betcha.