Who will Microsoft buy next? Look to the past to predict the future

Question: What is one of the industry’s favorite games these days? Answer: speculating on who will be the next target of a Microsoft acquisition. With Microsoft’s double-whammy acquisition announcements this month (the surprise $1.2 billion purchase of Fast Search and Transfer on January 8 and the purchase of Calista earlier this week) the rumor mill is churning as to who will be next.

Now, it is an important part of the blogosphere to keep readers constantly fed with gossip and we take such responsibilities seriously. We must all be well-stocked with chitchat for our weekday power lunches and weekend meet-and-greets. With this blog post, you’ll not only be brought up to speed on the current Microsoft acquisition gossip, but will get a recap of all of 2007. (What a bargain, huh?) We’ll compare the rumor to reality to see how accurate the rumor mill has been so far.

that, based on the Fast Search & Transfer deal, Microsoft likes to pay high dollar for unprofitable companies.

Rumor

Logitech. Its shares soared around January 10 based on the hearsay that Microsoft wanted it. (Kudos to you, Logitech shareholders.).

Another rumor spread about that time was that Microsoft would buy its unprofitable content delivery partner, Limelight Networks. Guess the thinking goes

Reality

While investors were busy speculating on Logitech, Microsoft this week bought a private company, Calista, makers of desktop virtualization software.

Rumor

2006 – 2007, Yahoo: This rumor circulated throughout 2006 and kept resurfacing in ’07 , even as late as November. Perhaps some bloggers are still yapping this one up.

Reality

May 18, $6 billion purchase of aQuantive.

Rumor

The aQuantive purchase didn’t completely squash the rumor, however. In November, blogger Henry Blodget dusted the rumor off and sent it out in the world again.

Reality

On January 8, Microsoft announced its intent to pay $1.2 billion to acquire search engine maker Fast Search & Transfer. (Can we please call the Microsoft/Yahoo rumor officially dead now?)

Rumorpublically debunked by Microsoft exec Shane Kim on CNN.

March, ’07: A rumor that Microsoft would buy game maker Take Two Interactive Software circulated until it was

Reality

On December 3, word got out that Microsoft had bought file sharing service WebFives in November. Microsoft was said to have had an equity investment in WebFives (or the story might be that some Microsoft executives provided angel VCs funding for it). Its founder was a former Microsoft distinguished engineer. Microsoft shut the WebFives service down on December 31 and no mention of the company can be found on Microsoft’s Website.  

Rumor

Speculation that Microsoft would buy Facebook surfaced on September 24.

Reality

On October 24, Facebook confirmed that it accepted a hefty $240 million stake from Microsoft. This was the only significant new stake in a company that Microsoft made in all of 2007. The upshot of all the analysis was that Facebook would be a frontrunner in a new form of advertising, called “Facebook Ads.” This was prior to its “Beacon” system blowing up in Facebook’s face. Beacon tracks Internet users’ movements in an abhorrently stealthy way, even when users are logged off. Earlier this month, this so-called new advertising system lead Mark Zuckerman to be asked to explain himself on an appearance on 60 Minutes.

The rumor mill gets a “nice job” rating on this one, even though Microsoft’s investment technically wasn’t an acquisition.

Rumor

November, ’07, GPS maker Garmin was a favored choice as a potential Microsoft target . (This one is still interesting, as Microsoft does seem to like to attempt to dominate markets that it apparently has no business playing in. But other than that, the rumor mill has so far failed the accuracy test on this one.)

More rumors

Puhlease! A Microsoft/SAP combo is like pouring salad dressing on corn flakes. Too weird to think about.)

December, ’07, SAP’s shares soared briefly on rumors that Microsoft might buy it. (

So – is it looking like the rumor mill is accurate when it comes to predicting Microsoft acquisition strategy? We didn’t think so either. (The next page charts the full list of Microsoft’s 2007/2008 acquisitions.)

Here is the full list of Microsoft acquisitions in 2007/2008 (so far).