How Salesforce’s Quip Buyout Is Fueling Competition in Cloud Space



Microsoft Office 365 dominates the office suite space

Earlier in the series, we discussed Salesforce’s (CRM) recent Quip acquisition and how it will enhance the company’s position in the office suite, productivity, and collaboration space.

Microsoft’s Office 365 dominates the office suite space and has witnessed increased adoption, as the below chart shows. Office 365’s double-digit growth with each passing fiscal quarter proves this. In 4Q16, Office 365 and Office consumer revenues grew 54% and 19%, respectively. Microsoft’s (MSFT) recent acquisition of LinkedIn (LNKD) is expected to further boost its Office 365 offering. Please read Office 365 Is Beating Its Peers in the Office Suite Arena to see how Office 365 is faring in comparison with its peers. Apart from Microsoft and Salesforce, Google (GOOG) and Box (BOX) are other prominent players in the office suite space.
Office 365

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Salesforce aims to challenge Microsoft’s dominance in the office suite space

Salesforce’s Quip acquisition is symbiotic to both the companies. By adding Quip, Salesforce can broaden its presence in the cloud space by integrating content and communication solutions to its offerings, while Quip can broaden its reach to a wider network of customers.

In the words of Bret Taylor, “Quip is a collaborative productivity suite intended to be the next generation of what Microsoft Office was in the previous generation.” With the Quip acquisition, Salesforce not only aims to improve its position in the office suite space but it also seeks to challenge Office 365’s dominance in this space.

Prior to this acquisition, Salesforce also submitted a bid for LinkedIn. However, LinkedIn accepted Microsoft’s offer instead. It is a known fact that the Salesforce bid forced Microsoft to raise its offer for LinkedIn. Please read Did Microsoft Make the LinkedIn Offer to Thwart Salesforce’s Bid? to know more.

Salesforce’s acquisition of Quip is likely to intensify its competition with Microsoft in the cloud space. Investors who wish to gain exposure to Salesforce could consider investing in the SPDR S&P 500 ETF (SPY). SPY has a ~29% exposure to application software. It invests ~0.23% of its holdings in Salesforce.


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