The deal, worth $15.7 billion in stock, gives Salesforce a popular data analytics and visualization software with a diverse customer base. It also shows that in a hot M&A market for data firms, Salesforce is serious about competing with Microsoft in the market for business insights.
"Tableau is increasingly challenged as a standalone vendor; they really need to be embedded in business analytics. Microsoft was eating its lunch with Power BI," said Rebecca Wettemann of Nucleus Research, referring to Microsoft's (MSFT - Get Report) data visualization tools. Just today in fact, Microsoft announced that it added new AI capabilities to Power BI.
On a call with investors, Salesforce co-CEO Marc Benioff hailed the Tableau (DATA) deal as a match made in heaven and a worthy complement to Salesforce's existing analytics tools, which include Einstein, Analytics Cloud and others. Unlike Salesforce's homegrown analytics tools, however, Tableau supports outside data sources.
Comparing the Tableau acquisition to its purchase of Mulesoft last year, Benioff and other Salesforce executives said that Tableau would continue to operate independently, serving and growing its existing base of 86,000 customers, while supercharged by Salesforce's larger pool of resources. Benioff even worked in a dig at "traditional enterprise software companies" whose practice of buying up and then sidelining smaller companies he described as draconian: "Even today, some of those kind of older companies, started in the '70s, they kind of operate in this kind of strange behavior," he said.
Hyoun Park, a principal analyst with Amalgam Insights, said that the Tableau acquisition puts Salesforce closer to parity with Microsoft and Amazon in terms of cloud data analytics. It also, he noted, took Tableau off the table as a potential acquisition target of Amazon (AMZN - Get Report) , as some had speculated.
Still, Salesforce has some catching up to do: Park pointed out that Microsoft's SQL Server made it a pioneer in the cloud business intelligence market, and that database means its data integration capabilities are superior relative to Salesforce.
"The acquisition of Tableau is an important step forward for Salesforce to compete with Microsoft directly in cloud data, but it is not the end. Salesforce would still need a database, perhaps such as Snowflake, to more directly build a data stack that competes directly and fully with Microsoft and Amazon."
Another way that Salesforce could potentially step on Microsoft's turf? A simple matter of geography.
Benioff praised the talent market in the Seattle area, home to Microsoft as well as Amazon. By way of purchasing Tableau, Benioff declared Seattle to be Salesforce's new "HQ2, if you will," and suggested that Salesforce would expand in that market beyond Tableau's existing footprint.
"I am a huge admirer of the talent market in Seattle...the ability to make this geography a part of Salesforce is something I've wanted for a very long time," he said.