Might Microsoft break its acquisition drought with a social gaming company?

Summary:This week, there is a new rumor swirling that Microsoft might be sniffing around Linden Lab. Might the Softies buy the Second Life maker -- or some other social-gaming vendor -- to break their year-long acquisition dearth?

There's been a lot of analysis this week of a study that exposed the fact that Microsoft hasn't made a single acquisition in calendar 2010. (The Softies told News.com there may have been some minor, quiet ones, but nothing serious.)

I didn't find the dearth of Microsoft acquisitions disquieting. It actually made sense to me, given the company has been laying off employees and supposedly trying to weed out projects that didn't make a whole lot of sense. Also, if you look at Microsoft's track record digesting some of its bigger and more visible acquisitions -- Danger and aQuantive come most quickly to mind -- acquisitions haven't always panned out for Microsoft. And then there was the near-acquisition of Yahoo... let's not even go there.

This week, there is a new rumor swirling that Microsoft might be sniffing around Linden Lab, the company behind the Second Life social-gaming platform that was the darling of many a tech company a couple of years back.

Microsoft isn't commenting on the Linden Lab report, but I've been asking around and hear from my sources that Microsoft may have made overtures not only toward Linden Lab, but other social-gaming vendors lately. The word from my sources is the Softies are not simply talking partnerships; they're talking outright purchase.

Microsoft has been working to expand its gaming franchise beyond first-person shooter games. And wouldn't 3D social games make a nice addition to the Xbox Live Dashboard and/or as a way to expand the potential user base for Kinect, Microsoft's Xbox sensor that is launching in early November?

Back to Microsoft's acquisition history/trends. Microsoft bought six companies in 2009, 16 in 2008 and eight in 2007, according to the acquisition listings on the company's Web site. (There may have been a few other smaller, under-the-radar ones, but these are the primary ones.)

Back in 2007, Microsoft made some big deals which seemed to pan out fairly well (other than aQuantive, which has been a mixed bag). Those acquisitions included TellMe (the voice search company whose technology will be in Windows Phone 7, among other platforms), Medstory (which became part of its HealthVault and Bing plays) and AdECN (the ad-exchange that Microsoft used to shore up its search/ad play).

Here are Microsoft's 2007 acquisitions (from its financial Web site):

In 2008, mobile and search purchases again dominated (along with a good sprinkling of virtualization vendors). Microsoft's 2008 acquisition list, with companies like Danger, FAST Search & Transfer, PowerSet and FareCast all on the list. Last year, Microsoft's acquisition list dwindled, but did include one gaming vendor (BigPark).

Here's Microsoft's list of its 2008 acquisitions:

And its list of 2009 acquisitions:

Even though Microsoft didn't digest its Bungie acquisition well -- and Bungie ended up splitting from Microsoft -- that doesn't mean Microsoft is shying away from buying gaming vendors. And with companies like Google and Facebook (and even Amazon) all clamoring to get more into gaming and/or social gaming, Microsoft surely doesn't want to be odd one out.

Do you think a Linden Lab purchase would make sense for Microsoft? Any other social gaming vendors you think would be a better fit?

Topics: Microsoft, Banking, Enterprise Software

About

Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network. Got a tip? Se... Full Bio

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