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Data Sheet—Thursday, April 30, 2015

Good morning, Data Sheet readers. Apple and IBM may deliver up to 5 million iPads in Japan by 2020. It’s part of Japan Post’s program to keep tabs on elderly citizens. Watch for another update from Fortune senior editor Andrew Nusca after this morning’s briefing with IBM CEO Ginni Rometty and Apple CEO Tim Cook.

Plus, Microsoft thinks it can triple its cloud revenue to $20 billion within three years. That’s one reason it would be the most logical buyer for Salesforce, which is reportedly evaluating at least one takeover offer. Fortune’s Dan Primack and Adam Lashinsky weigh in.

Don’t forget: The latest financials from social network LinkedIn and security company FireEye are due this afternoon. Meanwhile, have a productive Thursday!

TOP OF MIND

Microsoft projects $20 billion in cloud revenue by FY 2018. That would triple its current run rate, which combines results from applications sold as a service (like Office 365 and CRM Online) and server capacity offered that way (the Azure products). One big part of how Microsoft will arrive there: the company is making it far more compelling for third-party software developers to use its platforms to deliver their own applications. That even goes for companies creating apps for Apple iOS and Android.

TRENDING

The not-so-secret demise of Secret. The anonymous messaging app company’s founder and CEO David Byttow is shutting down his year-old startup. At its height, the service claimed 15 million users. As for the $35 million in venture funding it collected: the rest will be returned to investors.

By the way, Secret’s most notorious rival, Whisper, is still alive and apparently well. It recently hired a new president, Mark Troughton.

Here’s how much Twitter could pay for ad-tech company TellApart: $533 million. The deal size wasn’t disclosed initially, but a securities filing confirms it will be one of the social media’s biggest acquisitions to date. Twitter will issue new shares to absorb the company.

Japan’s prime minister is visiting Silicon Valley. Shinzo Abe wants to create a “country where innovation is constantly happening.” Among the executives he will meet: Facebook founder Mark Zuckerberg and Yahoo co-founder Jerry Yang.

Apple’s tax troubles in Ireland may be “material.” The European Commission is challenging the country’s incentives for foreign companies. Apple has two subsidiaries there that may wind up paying back taxes.

You may have to wait longer for your Apple Watch. The Wall Street Journal reports that a defective part for the gadget’s “taptic engine” is slowing down the rollout. This is the part that “taps” your wrist when an alert is received.

THE DOWNLOAD

Would Microsoft buy Salesforce?

CEO Satya Nadella is shooting for $20 billion in cloud revenue in just three years. But his company could grow its presence more quickly by buying Salesforce. Dan Primack and Adam Lashinsky dissect Bloomberg’s report that the cloud software giant is evaluating at least one takeover offer.

Salesforce.com stock was halted on Wednesday afternoon, following a Bloomberg report that the company “is working with financial advisers to help it field takeover offers after being approached by a potential acquirer.” The cloud software giant’s shares had spiked 12% prior to the circuit breaker being tripped.

There were no details on the suitor’s identity, although speculation is already running rampant that this could be the first game-changing move for Satya Nadella since taking over last year as CEO of Microsoft. It’s also worth remembering that prior to being named CEO, Nadella led Azure, Microsoft’s cloud business.

A deal for Salesforce, whose market value is approaching $50 billion, would be among the largest tech acquisitions ever. Microsoft, worth just over $400 billion, is one of the few companies that could pull off such a deal, with $95 billion in cash (although much of that is offshore). From a strategic perspective, Microsoft’s customer relationship software offering that competes with Salesforce is considered to be an inferior product with a weaker market position.

What’s more, Microsoft and Salesforce have been increasingly chummy since Nadella became CEO. The two companies have an agreement to promote each other’s products, including a tie-in with Microsoft’s Office 365, the giant’s online version of its popular collection of productivity tools. In fact, Salesforce CEO and founder Marc Benioff has repeatedly and publicly lauded Nadella’s leadership, especially compared with Nadella’s predecessor, Steve Ballmer.

In an interview with Fortune in January, Benioff observed:

“Satya’s [been] talking about what he is trying to achieve with the company and how he wants to be more collaborative. So I decided to test him. I told him I wanted to hire one of his technologists as head of our infrastructure. What would be in it for Microsoft is the foundation of a partnership and give us more kind of ideas of things that we can do together. And he said okay. Now we’re learning about things that we could do with Microsoft’s file-management technologies and Office that we would never have known on our own.” Asked to describe the impact of the Ballmer-to-Nadella transition, Benioff said: “The other guy did not care about having a relationship with Salesforce. In fact he kind of did everything he could to not have a relationship with Salesforce.”

It’s unlikely Microsoft would buy Salesforce for its revenue. Instead, Nadella would consider the move a radical opportunity to shake up Microsoft’s culture by relocating the company’s headquarters to San Francisco and leaving behind some of Microsoft’s hidebound ways. Few Benioff observers expect the 50-year-old entrepreneur to relinquish control of his company. Then again, he gave up the CEO position at Salesforce once before, and he speaks frequently about the joy he gets from philanthropy.

A Microsoft spokesman declined to comment. Salesforce said in a statement: “We don’t comment on rumors.” One thing that’s certain is that Benioff and Nadella were together Tuesday night in San Francisco. Both attended a reception for CEOs that Microsoft hosted before a software developer’s conference Wednesday.

What other companies are on the potential suitor list? Read the rest of the analysis.

 

ALSO WORTH SHARING

Yahoo’s CEO got a big raise last year. Marissa Mayer’s total compensation for 2014 was $42.1 million, compared with $24.9 million in 2013.

Nokia earnings miss could complicate its Alcatel acquisition. Its stock is down at least 20% since the deal was announced. That may make the $16.6 billion pricetag tough to justify, reports Reuters.

Adobe scored another strategic partner for its marketing platform, Microsoft. The deal should appeal to businesses that use Microsoft Dynamics enterprise resource planning software.

Jive Software is challenging Slack, with a new social messaging app called Chime. It will also need to compete with Atlassian.

Try, try again. Eric Huggers, who ran the ill-fated Web TV division at Intel, just got a new job. Re/code reports he is now CEO and president of Vevo, the joint venture from Universal Music Group and Sony Music.

Bitcoin brokerage gets $50 million infusion. Goldman Sachs and IDG Capital Partners are the two lead investors in the new funding round for Circle Internet Financial.

Is your medical software ethical? Apple will let you know. Apps using ResearchKit will need an independent review before being listed in the company’s app store.

Mood glasses from Microsoft? The software giant was just awarded a patent for a “wearable emotion detection feedback system.” The technology could show up in smart glasses. The potential applications in a business setting? Delicate business negotiations or employee recruiting.

Speaking of patents, there’s a new move afoot in the Senate aimed at limiting the influence of so-called “patent trolls”, companies that own intellectual property but don’t actually make products based on those ideas. This latest attempt at overhaul makes litigation potentially more expensive by making plaintiffs who lose responsible for legal fees.

MY FORTUNE BOOKMARKS

Amazon and the FAA can’t seem to agree on drones by Jonathan Vanian

Online fashion mall Lyst raises a fashionable $40 million by Leena Rao

How many quarters will Dick Costolo last? by Andrew Nusca

Why Sony makes money every time you buy an iPhone by Benjamin Snyder

Chicago uses new technology to solve this very old urban problem by Mehboob Jeelani

Move over Netflix, Amazon: Sony’s Crackle is ramping up by Erin Carlson

The surprising cause of high summer airfares: “Legally-sanctioned collusion by Christopher Elliott

ONE MORE THING

Why an iPad software glitch grounded dozens of American Airlines flights into the nation’s capital.

MARK YOUR CALENDAR

MicrosoftIgnite: Business tech extravaganza. (May 4 – 8; Chicago)

NetSuite SuiteWorld: Cloud ERP strategy. (May 4 – 7; San Jose, California)

EMC World: Data strategy. (May 4 – 7; Las Vegas)

SAPPHIRE NOW: The SAP universe. (May 5 – 7; Orlando, Florida)

Gartner Digital Marketing Conference: Reach your destination faster. (May 5 – 7; San Diego)

Cornerstone Convergence: Connect, collaborate. (May 11 – 13; Los Angeles)

Cloud Foundry Summit: Open source development. (May 11 – 12; Santa Clara, California)

Annual Global Technology, Media and Telecom Conference: JP Morgan’s 43rd invite-only event. (May 18 – 20; Boston)

Signal: The modern communications conference. (May 19 – 20; San Francisco)

MuleSoft Connect: Tie together apps, data and devices. (May 27 – 29; San Francisco)

MongoDB World: Scale the universe. (June 1 – 2; New York)

HP Discover: Trends and technologies. (June 2 – 4; Las Vegas)

Apple Worldwide Developers Conference: Future of iOS and OS X. (June 8 – 12; San Francisco)

Hadoop Summit San Jose: Mainstreaming adoption. (June 9 – 11; San Jose, California)

Red Hat Summit: Energize your enterprise. (June 23 – 26; Boston)

Brainstorm Tech: Fortune’s invite-only gathering of thinkers, influencers and entrepreneurs. (July 13 – 15; Aspen, Colorado)

LinuxCon North America: All about open source. (Aug. 17 – 19; Seattle)

VMworld: The virtualization ecosystem. (Aug. 30 – Sept. 3, 2015; San Francisco)

Dreamforce: The Salesforce community. (Sept. 15 – 18; San Francisco)

BoxWorks 2015: Cloud collaboration solutions. (Sept. 28 – 30; San Francisco)

Workday Rising: Meet and share. (Sept. 28 – Oct. 1; Las Vegas)

HP Engage: Big data, big engagement. (Oct. 4 – 6; San Diego)

Gartner Symposium ITxpo: CIOs and senior IT executives. (Oct. 4 – 8; Orlando, Florida)

Grace Hopper Celebration of Women in Computing: World’s largest gather of women technologists. (Oct. 14 – 16; Houston)

Oracle OpenWorld: Customer and partner conference. (Oct. 25 – 29; San Francisco)