While a deal wouldn't be totally out of the question: ERP + BI + Office could be dangerous. SAP doesn't come cheap. And the two parties talked in 2004, but scrapped the idea because it was too complicated.
Memo to Reuters: The deal is still too complicated. But after Microsoft becomes more acquisitive (it'll have to at some point) and SAP integrates Business Objects anything is possible. Then we'd have an Oracle-Microsoft duopoly. And if Microsoft buys Yahoo we'd have MicroSAPoo. Can't wait.