Salesforce-Microsoft relationship tipping from friendly to frenemy

Posted by Ron Miller on Oct 13, 2016 9:45:00 AM

Salesforce.com_LTI_taxi_on_Bishopsgate_London_25_April_2008.jpgIt seemed like such a nice story when Salesforce and Microsoft, two companies that were battling it out in court not that long ago,  buried the hatchet last year—or so it seemed.

It could be that the friendship is strained once again as the competitive nature of both companies has begun to surface over the last several months.

For years, Microsoft and Salesforce were at each other's throats. It got so bad that in 2010 Microsoft sued Salesforce for patent infringement and then Salesforce countersued. That was in the days when Steve Ballmer was in charge of Microsoft. When Satya Nadella took over 2014, there was a marked shift in the company's attitude.

The relationship improved. The two companies buddied up and formed partnerships. There were even a few short-lived rumors that Microsoft would buy Salesforce. That didn't happen, but last year, Microsoft CEO Satya Nadella appeared on stage with Salesforce chairman and CEO Marc Benioff at Dreamforce, Salesforce's massive customer conference, a sure sign that the relationship was stronger than ever (or that Hell had frozen over, one or the other).

On stage while Nadella said all the right things, he also let it be known his company would strive to compete for customers, even while recognizing it was incumbent upon him, and all platform companies to work together on a compatibile level.

Beyond the Dreamforce speech

We tended to focus on the kumbaya part of the speech, and less on the competition aspect, but in the year since we have seen the friendship fray a bit. It's hard to know exactly when it happened, but slowly over time like so many relationships, it seems to have unraveled.

While Melinda Gates was at this year's Dreamforce last week talking about the charitable efforts of the Bill and Melinda Gates Foundation, that was about as close as you got to hearing about Microsoft at this year's show, a stark contrast to last year. Subscribe to the Intronis blog
Clearly the two companies need some space. Microsoft announced last summer it was expanding its Dynamics CRM product by combining it with its Dynamics ERP for a broad backoffice approach. This week it announced some aggressive pricing to try and undercut Salesforce, which remains the clear market leader.

According to numbers released by Gartner in May, Salesforce has 19.7 percent marketshare while Microsoft is in fourth place with just 4.3 percent.

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Salesforce took a shot of its own across Microsoft's bow later in the summer when it bought Quip for $750 million, a clear move to undercut Microsoft's flagship Office product. Perhaps that's why Microsoft wanted to shout it from the rooftops when it won a huge deal with HP, Inc. in September, taking a nice chunk of business from Salesforce just weeks before Dreamforce.

Microsoft executive Scott Guthrie was uncharacteristically aggressive calling the deal "a Salesforce takeout."

All of this shows the two companies need some time apart and maybe the friendship which looked so promising just last year is starting to show some signs of stress. It was bound to happen.

Even though the cloud encourages more cooperation between companies, and even forces large organizations to provide integration across products, it doesn't end the competition, which is always going to burn hot— as we've seen with Microsoft and Salesforce.

Intronis MSP Solutions State of the Industry SurveyPhoto: Dominic Campbell. Used under CC by 2.0 license.

Topics: Cloud Trends

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