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How Microsoft and Facebook Are Spending $1 Billion Each

"A billion here, a billion there, and pretty soon you're talking real money."
-- Something Sen. Everett Dirksen probably never actually said, but still a good quote.

Microsoft and AOL this week cut a deal that makes both parties look like titans of the lost 1990s compared to Facebook, which just keeps charging ahead into the 21st century.

The software giant bought a billion dollars worth of patents (more than 800 of them) from the provider of Internet service to senior citizens, giving AOL a much-needed (but one-time) financial shot in the arm and providing Microsoft's lawyers with fresh new ammunition for the company's patent-lawsuit weapons. The deal seems like a win-win, to use horrible jargon, but it's about as exciting as a "never-ending talk show" (which, terrifyingly, could actually emerge from the deal).

Meanwhile, Facebook, all youth and vigor, is buying something called Instagram for about $1 billion. Instagram must be new and hip because your editor has barely heard of it and has certainly never used it. That's a good sign that it's excellent acquisition fodder for Facebook. If your editor is actually using an application or Web site on a semi-regular basis, it's pretty certain that app is embarrassingly passé and is about to fade into oblivion (after all, we at RCPU actually own an HP Touchpad). Instagram passes the RCPU "what?" test and therefore should be a wise spend for the Facebook folks.

Although they're not related, these deals do reflect where Microsoft and Facebook are as companies. Microsoft's billion is basically going to lawyers, who will likely be able to make the company a ton of money by crushing competitors large and small in East Texas courtrooms (where patent lawsuits always seem to happen). It's also a defensive buy, covering Microsoft's considerable backside in case of legal attack from some patent troll. That's great, but it's not exactly something that's going to spur innovation or give partners a talking point for prospective clients.

Facebook, meanwhile, is off buying something it can weave into its services -- probably in some way that will end up enraging users about a lack of privacy, but still. The new paradigm for everything, social media, is swallowing up new categories of users and expanding its profile while Microsoft, a traditional software company, is digging in for legal battles and bailing out struggling, has-been tech titans. This is dining at the Ritz and embarking on a night of clubbing compared to scarfing down the 4:30 p.m. "dinner" special at the Golden Corral (we just kind of figure there is one) and going home to watch something on TV with "CSI" in the title. But, hey, that's the way it goes getting older ... right?

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Posted by Lee Pender on April 09, 2012 at 11:56 AM

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Reader Comments

Mon, Apr 16, 2012

For any of you that thinks Instagram is worth a billion dollars, I have this great fart app I'd like to sell you for a mere million. No really...I have 5,000,000 "active" users...really I do.

Tue, Apr 10, 2012

I, too, find myself drifting off, waiting for Microsoft to do something - anything - that makes sense or even hints at increased relevance in the days ahead.

Mon, Apr 9, 2012

You know, it isn't fair for me to just be critical of Lee's lopsided articles. Here is the answer to the question of, "Well, how should RCP have covered the Instagram acquisition?" The following article, from WPCentral, is not some Microsoft love fest. However, they make an INFORMED guess as to how the Instagram acquisition could impact Microsoft and Windows Phone: http://www.wpcentral.com/facebook-buys-instagram-1-billion-and-increases-chances-windows-phone WHY aren't we reading similar -- if not MORE in-depth -- articles in RCP? WHY don't we hear how the Instagram acquisition could benefit and/or impact Microsoft Partners?

Mon, Apr 9, 2012

It would be one thing if Lee actually knew what he was talking about, but he admits -- in this article no less -- that he doesn't do a lot of research outside of whatever drops onto his desk. Of course, a publication for the Microsoft Partner community should take Microsoft to task over strategy, product quality and more. However, those articles should be based upon facts and research, not vague suppositions. There is no excuse for being uneducated about the state of current technology -- as evidenced by Lee's total ignorance of Instagram, a product so large that it was worth a BILLION dollar acquisition. One can forgive some cub reporter not knowing about some vowel-challenged app, but there is absolutely no excuse for an editor of a tech publication not knowing a huge player in the app market.

Mon, Apr 9, 2012

What's up with that last guy's attitude anyway? What I like best, myself, is that Lee ranks among those who chose to be something other than just another Microsoft mouthpiece and apologist - the last thing the world needs is yet another one of those - but instead reports on the ugly truth, that Micrsosoft has never, at any other point in its history, been more completely screwed up than it is right now.

Mon, Apr 9, 2012

For those that might not get the joke at the end of the last post, even though they're supposed to focus on Microsoft, the offices (and our good friends Barney and Pender) are in the Boston area. In a number of ways, this might explain their news coverage.

Mon, Apr 9, 2012

Wow, Lee... As a tech publication editor, your obligation is to know more than your readers -- at least about the things you write. Yet you take pride in your ignorance and laziness. I'm not an iPhone user, but even I know what Instagram is. Considering your constant WinPhone bashing and Apple love, one would presume you're an iPhone user (or at least a wannabe). How hard would it have been for you to... maybe GOOGLE what Instagram is? (Since you probably hate Bing, too.) Of late, the Redmond / RCP publications bring to mind a scene from the movie Animal House. I'll paraphrase: DEAN WORMER: "Mr. Barney: two C's, two D's and an F. That's a 1.2. Congratulations, Barney. You're at the top of the Redmond magazine pledge class. Mr. Pender? PENDER: "Hello!" WORMER: "0.2..." (you can look up the rest) I just picture the 1105 offices looking like the Saturday Night Live skit of Jimmy Fallon and others playing The Boston Teens: "Pendah, you're retaahded." "No, Baahney, you aahhh!"

Mon, Apr 9, 2012

Hmm. Seems to be something missing above - what else with Windows in the name is failing to the degree that's likely for Windows 8? Oh, yeah, that's it - the dude must have been referring to Windows Phone. Couldn't agree more...

Mon, Apr 9, 2012

Given Microsoft will likely make more in patent-related litigation than Windows and Windows 8 combined, perhaps the brain trust in Redmond might be interested in selling Silverlight to a future-focused company like Facebook? Seems like it'd be a win-win all the way around - Microsoft could add a few more clones to its legal staff while the slow-motion trainwreck in Redmond inches toward the abyss; a company like Facebook, one with increasing - rather than decreasing - relevance could acquire and invest in the most powerful - but foolishly abandoned - technology the last of mighty who've now departed Redmond ever produced; and the rest of us ready to use it to rock the world (those of us that Redmond spit upon, ignored and treated as pariahs) can get back to work...

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