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

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?

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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 has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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

    They really didn't need to make any acquisitions. They do a lot of their own stuff in house. Purchasing Linden Labs... well I wouldn't say its a waste of money because Microsoft could only improve that company and their service. It can't get worse that's for sure. I like the idea of them getting a social game of some sort though. Integrate it with the new WP7 phone somehow and it would be money well spent.
    Loverock Davidson
    • MS as a toy company...

      makes sense.

      "They really didn't need to make any acquisitions. They do a lot of their own stuff in house. "

      Their new game controller (THE big product for 2010 according to Ballmer) might has made a measurable ripple but it looks like a pretty lean year for the MS fanboy.

      Where does their claimed USD9 billion a year in R&D go;-)
      Richard Flude
      • RE: Might Microsoft break its acquisition drought with a social gaming company?

        @Richard Flude http://research.microsoft.com/apps/dp/areas.aspx

        this might help you understand where the 9B is going
        TGGR
      • TardHugger: it's always been clear

        MS is the king of the press release and bullet point, as your link so comprehensively shows.

        Sadly I was talking about products;-)
        Richard Flude
      • Where Does Their Claimed USD9 Billion A Year In R&D Go?

        @Richard Flude
        Into the bank--where all prudent savers secure their stash!
        eargasm
    • RE: Might Microsoft break its acquisition drought with a social gaming company?

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

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

    You are going to take a rumor from a well known GRIEFER and someone BANNED from using the Second Life platform and put it on ZDNet?

    Holy cow, how idiotic! Could it be possible this is the best form of griefing without even having to log in?!

    You people clearly do not do any research at all!!!! Good to know!
    kissrocks2
    • Doing research

      Hi. TechEye was first to report the rumor as I noted. I also noted I have asked around and other sources of mine are saying this is a possibility and that they have heard MS is looking at not just Linden Lab but various social gaming companies. Sorry if you missed that if/when you "read" this post. MJ
      Mary Jo Foley
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  • RE: Might Microsoft break its acquisition drought with a social gaming company?

    Microsoft quietly bought up Vivaty earlier this year. The KPCB backed startup was a Second Life type virtual world that was embeddable in the browser.
    benkessler
  • MSFT would never buy this all-Java and Sun tech

    Mary Jo - you are the first to show up with a reasonable source to, perhaps, justify spreading the rumor. Before this, it was some laid off Linden guys in the UK speculating over beers.

    If they bought Linden, what are they really buying? A gaming platform built on Java? Yeah, right. Because Linden's business is growing? Yeah right.<br><br>If the acquisition occurs, it's because of tired Linden investors offering a fire sale price...which affords MSFT some smart employees, decent IP and a sizeable customer base (of questionable value).
    kurt@...
    • RE: Might Microsoft break its acquisition drought with a social gaming company?

      @kurt@... not java .. second life uses dotnet .. so maybe this does make sense!
      spsat
      • RE: Might Microsoft break its acquisition drought with a social gaming company?

        @spsat Actually it's built on Mono, which isn't quite .NET. Which brings up an interesting point. Second Life is an open-source (GPL I believe) platform. Will Microsoft develop it and keep it open, close the source, or just let it flounder?
        pdickey043@...
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    • Speculation regarding Linden

      For what it's worth, one of my contacts thinks MS is interested in the micropayments platform as much/if not more than the actual game itself. MJ
      Mary Jo Foley
  • RE: Might Microsoft break its acquisition drought with a social gaming company?

    It would make sense if MS is serious about their social/casual arm. They'd have some assets from the purchase, but it's not totally clear on how they could use it.

    If they got value from rebuilding Second Life then maybe.
    majg
  • Wow... just Wow...

    To think that Tizzy started all this.

    Tizzy is Tizzers Foxchase, and is heavily involved in Woodbury. From the original article, " Tizzy apparently has a connection with Woodbury.edu, a college in LA, and they know a fair few movers and shakers in the biz and software game." Read more: http://www.techeye.net/internet/microsoft-to-buy-second-life#ixzz113W0Ou2t

    The thing is, Woodbury was perma-banned from SecondLife, owned by Linden Lab. So, be so kind to take the time to consider the source of the rumors that abound.
    Eva Ryan