Pigs flying? Salesforce.com running on Microsoft Azure? Don’t laugh

Here’s an eye-opener: Microsoft(s msft) and Salesforce.com(s crm) are discussing a deal that could put Salesforce.com’s market-leading CRM Software as a Service on Microsoft’s Azure cloud, according to Bloomberg’s Dina Bass.

And that, my friends, is a huge thing. Even if no deal is completed, the fact that they’re talking about it — and Bass is usually on the money — is big. Microsoft has spent a lot of time and money building its own Dynamics CRM, with Salesforce.com in the crosshairs.

Mark Moerdler, senior analyst with Bernstein Research, said in a note that it’s possible any deal would be limited to “Salesforce.com’s Sales Cloud, Service Cloud and possibly Force.com as these are the most synergistic to Microsoft cloud offerings (Office 365, Azure, Skype and possibly even Microsoft Dynamics CRM).”

Salesforce.com’s exuberant CEO Marc Benioff has been known to make sport of Microsoft as a big, bloated software vendor. Ironically for a company that once spouted a “No Software” slogan, Salesforce.com really is all about software. It’s just that the software runs from its own data centers, not on local desktops, but hey, marketing.

Last fall there was a sign of flexibility in that deployment model when Salesforce.com said it would work with Hewlett-Packard(s hpq) to build a version of its software to run on HP’s converged hardware for very large customers. Up till then, the company pretty much built its franchise on Oracle’s database and middleware and Dell or other standard hardware — with some vague handwaving last year around running on Oracle’s exa-boxes. Not sure where that ever went.

But I digress…a Salesforce.com and Microsoft deal would take coopetition to a whole new level and show just how much Microsoft wants the world — including its applications competitors — to run on Azure. And that’s something we’ll ask Microsoft EVP Scott Guthrie about in a few weeks when he’s on the Structure stage. Folks who had written off Azure back when it was a Microsoft-centric  PaaS-focused are coming around. Gartner’s new infrastructure on a service report, showed Microsoft Azure making huge strides.

Some will probably see this deal, if it is completed, as a sign of a transformed Microsoft under new CEO Satya Nadella, but that is not really the case. Remember, last year, Microsoft cut a deal to run software from rival Oracle (at least its database, middleware and hypervisor) on Azure and former Microsoft CEO Steve Ballmer presided over that press event.

It’s still unclear to me how much of Microsoft’s own business software other than Dynamics AX ERP and Dynamics GP run on Azure. And there appear to be integration points between Dynamics CRM and Azure, but I will update this when I hear more.

Microsoft has not responded to requests for comment. A Salesforce.com spokeswoman said the company does not comment on specutlation. This story will be updated as appropriate.


This story was updated at 9:57 PST with Salesforce.com’s comment.