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What's behind Microsoft's not-so-crazy startup spending spree

Bob Brown | April 10, 2015
CEO Nadella’s influence, platform-agnostic approach cited.

As Fortune wrote recently, "Microsoft is buying startups people love..."

We reached out to Microsoft a week ago to discuss the spending spree with their M&A personnel and we will either update this article or create a new one if they do get back to us. In the meantime, we got feedback from industry watchers and investors, all of whom credit CEO Satya Nadella and his "new" Microsoft for heading aggressively down the acquisition path.

"Right now is a great time for Microsoft to be buying startups," says Forrester VP and Principal Analyst J.P. Gownder (@JGownder). "Companies in some of these fields, like machine learning (Equivio), are solving really specific problems in computational intelligence, and would require Microsoft to staff up big teams to catch up. In other cases, the company purchased is already a key partner [such as heavily reported but unconfirmed N-trig buyout]. And in yet other cases, they are receiving IP that applies to their cross-platform strategy to deliver iOS and Android apps (as with Sunrise). These are all well-considered, smart acquisitions."

CEO Nadella has indeed been a force behind Microsoft's approach, Gownder says.

"Satya Nadella is driving a new Microsoft forward: One that is more agile, more attuned to customer needs, and less entrenched in the platform wars. He wants to deliver an experience for Windows that customers will love' (not tolerate), in his words, while also empowering Microsoft to deliver software and services on non-Windows platforms. To accomplish these goals, he needs the traditionally contemplative, slow Microsoft organization to move more quickly. So these acquisitions flow naturally from the new mindset, and bode well for Microsoft's future (even if a lot of work remains to be done)."

Rob Go (@RobGo), co-founder and partner at Sunrise investor NextView Ventures, concurs.

"Microsoft has had a history of growing its product and talent base for many years. But under Satya Nadella, what we are seeing is a company moving with renewed strategic focus and conviction.  One major theme that ties together many of these

acquisitions is a newfound respect for the ecosystem that surrounds the company's software and hardware products.  From an ethos that was much more protective and silo-ed, Microsoft is making major moves in extending their software onto other companies' platforms (leading productivity apps on IOS and Android like Sunrise and Acompli, a platform-agnostic file viewing service like LiveLoop, third-party integrations with Dropbox, etc)."

Jack Gold (@jckgld), principal analyst and founder of J. Gold Associates, describes Microsoft's moves as both offensive and defensive, and a good use of a cash hoard that hovers around $90 billion even if the company is just scooping up qualified professional staff additions.

 

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