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Microsoft's Deal With SAP is Nadella's Latest Coup

U.S. stock markets rose moderately today on little market-moving economic news. Merger offers such as the AT&T-DIRECTV tie-up and Pfizer's so-far foiled pursuit of AstraZeneca can often give investors confidence that companies see value in competitors, pushing shares broadly higher.

The blue-chip Dow Jones Industrial Average (DJINDICES: ^DJI  ) was up just 0.09% late in trading, including a down day for AT&T. But it's news from Microsoft (NASDAQ: MSFT  ) that caught my eye today.

Microsoft's deal-making days are just beginning
Among a number of goals, Microsoft is trying to move more services onto the cloud, highlighted by Office 365 and enterprise cloud offerings.  

The tech giant announced today that it's expanding a partnership with SAP  (NYSE: SAP  ) , one of the largest business software companies in the world, to bring SAP's applications to the cloud. Microsoft's cloud platform Azure is expected to run SAP applications as soon as the end of this quarter.

This start menu could become more attractive to big corporations with SAP now in Microsoft's cloud.

The partnership is key for both companies because it allows corporations to push software, applications, and data storage to the cloud instead of monitoring their own systems. This will also ensure operability of SAP software with Microsoft Excel, which is crucial for data-heavy outputs from SAP's software.

Important for Microsoft, SAP will also make apps for mobile devices. This could make Windows-powered tablets and smartphones more attractive to businesses, which have largely shunned Microsoft's move into mobile. This will be important, given that Microsoft CEO Satya Natella is introducing the next generation of Surface tablets at an event tomorrow.

Adding widely used enterprise software that integrates well with Microsoft software and cloud services is the latest advance for the Windows maker, which is moving away from reliance on PCs for revenue. Today's deal may not get the publicity tomorrow's Surface event does, but when it comes down to purchasing decisions for information technology organizations it's probably more important. That's an important win for Nadella as he looks to reshape Microsoft.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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9/1/2015 4:35 PM
^DJI $16058.35 Down -469.68 -2.84%
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Microsoft CAPS Rating: ***
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SAP AG (ADR) CAPS Rating: ****