"There was never a formal discussion or negotiation between the two companies," Rossius said at a news conference in Tokyo, responding to a question about the two firms' acknowledgement last week that they had held merger talks.

"Based on general Microsoft strategy, when they want to engage in a certain new business environment, they ask really the number one in that business," he said.

"We were listening to that but then it was our decision to no further engage in this," he said. He did not clarify why the talks were called off.

The firms said they made the unusual move of confirming the talks because they were likely to be raised during an anti-trust trial over Oracle Corp.'s hostile takeover bid for PeopleSoft Inc.

Microsoft said last week that "it initiated preliminary discussions with SAP AG to explore the possibility of a potential merger between the two companies."

A few months ago, Microsoft "ended these discussions due to the complexity of the potential transaction and subsequent integration," it said. "There are no intentions to resume these talks."

Rossius said a May announcement in New Orleans that SAP software would be more compatible with Microsoft's .Net technology was more significant from its customers' point of view.

"We have a huge installment base on Microsoft's architecture," Rossius said. "It's more than 50 percent of all our customers.

"It was a very customer-centric approach and whatever we developed on inter-operability was really in favor and at the request of our clients," he said.

SAP, which has its headquarters in Walldorf, Germany, was founded in 1972 and employs roughly 30,000 people.

It claims to be the world's largest inter-enterprise software company and the world's third-largest independent software supplier overall.

SPACE.WIRE