-by Jesse Atlas
According to Salesforce (NYSE:CRM) CEO, Marc Benioff, merger and acquisition season is upon us. Benioff put his money where his mouth is last week when Salesforce announced that it would be acquiring the word-processing app Quip for $750 million. This merger comes hot on the heels of Microsoft (NASDAQ:MSFT) announcement that it had made its largest acquisition ever by agreeing to pay just north of $26 billion for the professional networking site LinkedIn (LNKD). It was also revealed that Salesforce had approached LinkedIn about making an acquisition offer, but the company was already far down the road in negotiating a deal with cash rich Microsoft. Microsoft also agreed to let LinkedIn to continue to run as a standalone business, which Salesforce may not have allowed. I believe Salesforce acquisition of Quip will enable it to compete for software market share against Microsoft's Office 365 product suite.
Quip was founded by Facebook's former CTO, Bret Taylor and had raised about $45 million in venture funding before it was acquired. Benioff and Salesforce ventures had invested in the company before they decided to acquire it. The acquisition is unique because it highlights Salesforce push into other areas of the software business beyond its traditional customer relationship management software. Earlier this summer, Salesforce acquired an ecommerce company, Demandware, for just under $3 billion. Quip was originally a mobile only app, but has since added an app for desktop. Quip is very similar to Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Docs product as well as Microsoft Office 365, what makes it unique is its mobile first facing design. Users can create a document on the cloud as well as store it there, users to collaborate on documents through the cloud. Quip does not charge individual users for access to the platform, but it charges small companies $12 per user and large companies $25 per user. Quips list of illustrious customers include CNN, Facebook, and Electronic Arts.
Salesforce's vision for Quip
After the acquisition was announced, Taylor went to his company's blog to pen some thoughts on the deal. He said that Salesforce and Quip see eye to eye on the future of software; mobile based and accessible through the cloud. I believe Quip will be a great fit in the Salesforce portfolio of companies. Benioff is also a huge fan of Bret Taylor, even going so far as to say that he made the acquisition partly because,"It's been (his) dream to work more closely with Bret Taylor." The experience Taylor brings to the Salesforce team, and the product that will enhance Salesforce's mobile facing product solutions will help Salesforce grow and win over more customers who are looking for a little more than just a CRM software provider. Quip will also enable Salesforce to compete with the incumbent in the word processing space, Microsoft. Taylor is also revered around the valley for his mobile expertise, he was recently appointed to Twitters board of directors.
Competition from Microsoft
Microsoft made history last month when it made its biggest acquisition ever by paying just north of $26 billion for LinkedIn. Microsoft's CEO, Satya Nadella, posits that both tools to help business get work done, such as the Microsoft Office suite of products, as well as tools to connect workers, LinkedIn, are essential to business. After completing its acquisition of LinkedIn, Microsoft will be able to offer both of those components to its customers. This acquisition could help Microsoft steal some of Salesforce's CRM business. Sales people could harness LinkedIn to gather information about the people they are selling to and the business that they work for. While Quip will help Salesforce compete with some of Microsoft's product offerings, I believe the LinkedIn acquisition may threaten parts Salesforce's core business.
The bottom line
Microsoft and Salesforce will both try to use their acquisitions to try and win over each others clients, but I believe Salesforce has the upper hand due to its forward thinking cloud and mobile first strategy. Salesforce can also build out a new suite of tools to compete with even more of Microsoft's products since it has brought an amazing tech asset onboard, Bret Taylor, through its acquisition. Quip is a great acquisition for Salesforce and will bolster the company's success on mobile and cloud computing platforms.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in CRM over the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.