Who will Microsoft buy next?
Menlo Park, Calif.--What does Microsoft look for in its ideal match?
Sparkly eyes and a nice smile don't hurt, but Microsoft is really looking for two other qualities in its acquisition targets: key intellectual property and smart technical leaders who plan to stay with Microsoft.
"At end of day we are buying a company for (its) people and IP," said Mark Wolfram, a managing director in the Microsoft unit that handles acquisitions. Wolfram was part of a breakfast panel Tuesday sponsored by the VC Taskforce.
Mike McCue's sparkly eyes and nice smile aside, it was Tellme's business and people that Microsoft found attractive.
(Credit: Microsoft)Asked what is the smallest acquisition he'd consider, Wolfram insisted that there is no minimum revenue, provided its two prior conditions are met. Some of Microsoft's acquisitions have been companies with just a few people and no revenue. The company has also spent as much as $6 billion, with its recent acquisition of Aquantive, though $50 million and 50 to 100 employees tends to be the company's sweet spot, Wolfram said.
It's the people who are often the driving force behind whether a deal does or doesn't get done, Wolfram said.
"Someone asked Bill (Gates) what the best deal was," Wolfram said. "He said 'Groove--I got Ray Ozzie.'"
Henry Wong, a venture capitalist and start-up CEO who helped sell AdECN to Microsoft earlier this year, said it took a while to get started with Microsoft with discussions largely dormant for about six months. But Wong said that when things finally came together, they did so in a matter of just a few months.
"Once they make a decision, it's like a stampede," he said.
Wolfram generally agreed with that assessment. "Sometimes it takes us a little while to move," he said, noting that the company likes to do its homework. But he said, once the company is convinced it wants to make a move, "we can be very, very agile."
One recent mobile deal, he said, came together in just three weeks, although he said that is the rare exception, with most deals taking nine months to a year from first contact.
The Tellme deal also came together quickly, Wolfram said. One thing that helped speed things along, he noted, was that Steve Ballmer was the executive sponsor of the deal. "That's a good sponsor to have," he said. But even if Ballmer is not the one behind the deal, it's important to have a key business leader who sees the way your company can fit into Microsoft's strategy.
As for what the hot areas for acquisition might be, certainly advertising and mobile have been big, but Wolfram also mentioned two other areas. One is health care, where Microsoft has basically used the acquisitions of enterprise health care firm Azyxxi and consumer health search firm Medstory to get in business.
Another area he mentioned was entertainment and devices. Microsoft has had a few acquisitions here, such as in-game advertising firm Massive. But given his comments and the fact we haven't seen many purchases in this space, I'd say it's one to keep an eye on, particularly as Microsoft continues to play catch-up with Zune.
Some of the key decisions of who might acquire a start-up are made in its earliest days, noted Mark Lazar, an executive-in-residence for Redpoint Ventures. He noted that companies tend to have a love or hate relationship, with start-ups either using Microsoft heavily or running away from Redmond's technology entirely.
But those decisions, often made for cultural reasons, can also have a big impact on a company's exit strategy, he said. "It's awfully hard to approach Microsoft when you are built on 'Everything but Microsoft' technology," Lazar said.
Also important on the technology front is the issues of whether a start-up owns the intellectual property behind its products. In some cases, a lack of control has scuttled deals that might otherwise have gone through, he said.
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina. 
Its kind of odd saying they need to buy a clue. Obviously they have done what America does best.
Buy and market.
The origial owners of DOS flopped microsft made it go.
3Com could not make the Domain Model go, and could not even become a blip on the Novell Screen.
Now people say NDS what?
They goofed in the browser war but now have how much market share?
Now that does not mean all goes 100% but they have a track record of taking something and making it marketable.
For all the work and hype of Linux and or Mac, they must cry when they note that Vista took more market share in its first 6 months then both combined have managed to take in 10 years.
So a clue? I think they are a lot smarter then most give them credit for.
Bill Gates
#2 AOL
#3 Sun
#4 Novell
#5 Amazon.com
#6 eBay
#7 Palm Computing
#8 Nokia
#9 Nintendo
#10 Apple
On your list, I suspect Google maybe first in line to buy or merge TWX (including the AOL subsidiary), Sun and Apple. There's a lot of Boards of Directors cross pollination, senior execs and business histories already firmly in place.
The others you mention like Amazon, Nokia and Nintendo might more probably be a challenge for any firm to buy or merge for the foreseeable future.
Gerstner turned IBM around within 4 years through focusing the organisation on its core business and what it was good at.
Microsoft is jaw droppingly ignorant if it thinks it can simply buy talent. Talent evolves and needs an environment to develop and thrive and be inspired, it cannot be bought and stockpiled. When Stalin kept his best 100 doctors close to him, in no time they became the worst doctors in the USSR, simply because they had no environment to be stimulated in. In Philip Zimbardo?s book - The Lucifer Effect: Understanding How Good People Turn Evil, Zimbardo explains the concept of situational forces. How an environment is the dominating factor over and above the character.
This Elephant called Microsoft will be bled dry by these agile lions called google, apple and all of those amazing businesses we have not yet heard of coming from China, India let alone in their own back yard, that are going to bite into every business vulnerability until this beast drops.
Steve, Bill... Heads need to roll and units need to be sold. Who the hell are you, what the hell are you...
Following the successful turnaround of IBM Louis Gerstner wrote 'Who Said Elephants Can't Dance'. Copies of this need to prescribed to the board. If MS insist on running foolishly after this grail of ownership of the world talent they will drop only unless a messiah, in the shape of a Louis Gerstner, appears on the horizon in the shape of a grim reaper, to prune heads, business units and point out the obvious.
www.bookspodsandblogs.blogspot.com
While there's a company out there, now or yet to be formed, that will take MS down, the chances that it woud be Apple or Google are every bit as unlikely as all the others over the last 20 years that have tried.
The only thing that's special about Google is that it's MS's threat du jour. *MAYBE* Google will be a long-term problem, but it's more likely that they will be a Lycos or AOL. (Remember in the 90s when the ABM masses on C/ZDNet proclaimed that AOL would bring MS down. Those were amusing times.)
"Agile lions"??? That's rich stuff...
It is kind of hard to beat the default OS and software installed on new systems.
You'd have to have a government step in and cancel that agreement with Microsoft and OEM PC Makers, and then get 80% of the market to stop using Windows before you can put Microsoft out of business for good.
Until then, Microsoft will continue to dominate the market with a majority ownership.
Dog eats dog, the winner in this may just be an onlooker not yet known, strategically positioning itself to take advantage of the me lee....
By the by, I peeped into Amazon today:
http://www.amazon.com/gp/bestsellers/electronics/ref=sv_etk_ce_av__1/102-9018377-9264913
Look familiar? iPods occupy slots #2, 5, 15, 19, 20, 23, 27, 28, 29, 31, 33, 42, and 74...
Meanwhile we find [i]one[/i] Zune sitting at #20 - last year's model, selling for [i]50% off[/i] at $125 USD. This year's Zune model is nowhere to be found in Amazon's [i]entire[/i] top 100!
So, err, you got something besides a mis-read (on your part) site to back up your claims? Because your "evidence specifically mentions [i]both[/i] old and new models of Zune in their "Black Friday" article, and specifically calls the new one a [i]"dud"[/i].
Now - on to the Xbox... it's currently in #2, behind the Wii. Sony fell from #1 to #3 because they screwed up w/ the Playstation 3. Their problem.
So, err, if those two examples are your big evidence of MSFT strength, then methinks MSFT is screwed.
/P
If that fails steal it & bankrupt the innovators in court .
If that fails open your wallet & buy some innovation .
Extend. Embrace. Extenquish.
I mean, just because a company is large doesn't mean it can't be nimble. Intel, Cisco, Apple, Novell, and Oracle manage well enough... why can't Microsoft?
/P
There's nothing wrong with acquisitions, they don't stifle innovation. Acquisitions breed innovation. Men and women with guts start companies in order to capitalize on the potential for success. There are only three exit strategies for a company: public ownership (IPO), acquisition, or bankruptcy. You enter into a business with the intent to maximize shareholder value. To that, you have to make products or services that are valuable to customers. A acquiring company takes that product or service to the next level; a win win win for customers, the acquiring company, and the brave people who innovated their way to success.
To imply that acqusitions is opposed to innovation is narrow, and frankly, ignorant. The technology world we live in today is built on companies (yes, ALL of them) supplanting home grown technolgies with acquired ones.
their own machine. Then they could write code to maximize
Windows performance to a specific set of hardware.
Oh wait, that's been done already hasn't it.
Apple.
Oh wait....
Think about it.
Microsoft could very easily "adjust" the XBOX 360 to be the new MS-BOX complete with Vista/IE/ZUNEPLAYER, etc. etc....
Can Top Secret version of Vista run on the IBM PowerPC Chip inside of the XBOX ( like Mac OSX can do...)?
Then they could say bye-bye to all the other PC box makers ( HP/SONY/DELL/etc.,etc.)& be the software & hardware maker. ( MS becomes the new Apple complete with VISTA OS-PPC/MSBOX/ZUNE/ZUNIETUNES/MS-TV/MS-Phone/MS XBOX games....
Then it would all come down to Apple & Microsoft only as far as designing the whole experience.
Linux & open source would be left for all the other DIY computer geeks.
What would this MS Monopoly scenario do to the economy & the computer world as we know it today...? (The final stroke before Emperor Gates retires?)
http://www.sjtrek.com/trek/rules/
Bill Gates is the Grand Nagas, had to be said.
(hardware) company to be at par with apple. then they can be later
called "the apple killer."
The best protection is GPL or using GPL products. Google is a perfect example here. Microsoft couldn't ever buy them out because they relied heavily on Linux and the rest is history.
- Who will Microsoft buy next?
- by mwooge December 1, 2007 8:23 AM PST
- > It is obvious that MS forgot how to write an OS.
- Reply to this comment
-
(48 Comments)Easy for you to say. You ever try to write an OS?
Their main problem is the need to get a new product out every few years. This last one, with mixed reactions, isn't a major advance over XP.
I've been saying for years they need to do a white-paper rewrite. Forget about compatability with previous versions and third-party packages.