What Microsoft Bought and Why in Its Busiest M&A Year Since 2008
Microsoft was busier on the merger-and-acquisition front in 2015 than it has been in any year since 2008.
With two weeks still to go, Microsoft has acquired 14 companies in a calendar year that has seen a ton of M&A activity across the industry.
"It's white-hot," said Mike Harvath, CEO of Revenue Rocket Consulting Group, the Minneapolis-based firm that does a lot of M&A consulting in the channel, of the overall acquisition environment in 2015. Industry deal volume growth is expected to be up by double digits in 2015 with more of the same coming next year. "The bigs like Microsoft are buying around SMAC and the small guys are consolidating," Harvath said, using an abbreviation for social, mobile, analytics and cloud.
Many of the companies that industry giants like Microsoft are snapping up got investments right after the downturn and founders and owners are looking to monetize, Harvath said. "We've got some bubble and frothiness on the low end of the market due to this pressure to transform, and there's a bubble at the top end, primarily led by SMAC."
To be clear, there are different metrics for M&A activity. This year is clearly busy, although some of the years with fewer deals had some blockbusters. Case in point, 2014, when Microsoft completed only 11 acquisitions, but one of them was the $2.5 billion deal for Minecraft developer Mojang.
Looking at the company's purchases in 2015, many fit Microsoft's unique spin on SMAC, with a focus on personal productivity, machine learning-heavy analytics and security-specific cloud acquisitions, while at the same time padding strategic products like Office 365, Dynamics CRM and System Center with acquisitions that complement the existing feature set.
In CEO Satya Nadella's nearly two years at the helm, Microsoft has de-emphasized Windows as a mobile phone platform and instead focused on making Microsoft software the best personal productivity software no matter the device OS. A big signifier of that trend was Microsoft's decision in late 2014 to buy someone else's smartphone e-mail software (Acompli) and slap the Outlook brand on it. It was a big move for Microsoft to essentially say, "Outlook is one of our most storied products, but someone else made a better version for the iPhone so we'll buy it and make that the new Outlook."
This year saw the continuation of Microsoft snapping up mobile app providers for other traditional Outlook functions, calendaring and task lists. The specific acquisitions in that area where Sunrise, a calendar-app maker for iOS and Android, and 6Wunderkinder, maker of the popular Wunderlist to-do list app.
Another mobile productivity acquisition with implications for Office 365 and Office Graph is Mobile Data Labs, which specialized in mobile apps that simplify and automate mileage, expenses, time tracking and reimbursement for what Microsoft describes as the "self-directed workforce."
Combining mobility, personal productivity, analytics and social is Datazen Software, which Microsoft acquired in April. Datazen made one of the most promising early Windows 8 apps for data visualization and Microsoft plans to plug the technology into its Power BI strategy.
Ed.'s Note: Microsoft also acquired teleconferencing firm Talko on Dec. 22, after this blog was published. Read about that acquisition here.
Another analytics acquisition with a foot in the personal productivity world is organizational analytics specialist VoloMetrix, which Microsoft acquired in September. The company's software is supposed to help Microsoft's customers answer complicated questions like, "How can I improve my e-mails to ensure my communications are impactful?" and "Am I spending my time focused on my priorities?" according to Rajesh Jha, Microsoft corporate vice president for Outlook and Office 365. Microsoft plans to integrate the VoloMetrix technology with Office 365, Office Graph and Delve Organizational Analytics.
At the beginning of 2015, Microsoft bough Equivio, which the companies described as a provider of machine learning technologies for e-discovery and information governance. Microsoft has already productized Equivio in one of its most strategic product lines -- Office 365. At the beginning of this month, Microsoft launched the top-tier Office 365 E5 SKU, which bundles Equivio Analytics for e-discovery as one of several exclusive features along with secure attachments and URLs, access control, Power BI Pro, Delve Analytics, cloud PBX and PSTN conferencing.
Key to machine learning is statistical computing and predictive analytics. Microsoft got back to its programming language roots while also increasing its vertical integration in that strategic area with the acquisition of Revolution Analytics. The company was a commercial provider of software and services for R, a programming language for analytics.
Ed.'s Note: After this blog was published, Microsoft acquired analytics firm Metanautix on Dec. 18. Read about that acquisition here.
While Microsoft has a huge arsenal of cloud technologies, Redmond buffed its capabilities in security and application management in 2015 via acquisitions.
Adallom, one of several Israeli companies Microsoft bought this year, has a cloud access security broker that works as a Security as a Service solution. Microsoft plans to use the Adallom technology to complement Office 365, the Enterprise Mobility Suite and Microsoft Advanced Threat Analytics.
Microsoft also acquired close partner Secure Islands, which built a data protection solution on top of Microsoft's rights management technology. Microsoft expects Secure Islands' technology to enhance the capabilities of the Azure Rights Management Service.
Just as Secure Islands works across on-premises systems, Microsoft cloud services, third-party services and Windows, iOS and Android devices, another acquisition, BlueStripe Software, gives Microsoft a quick step up into a hybrid environment. Microsoft customers were already using BlueStripe to extend System Center with application-aware infrastructure performance monitoring, according to a blog post by Mike Neil, Microsoft general manager for Enterprise Cloud, announcing the acquisition. Microsoft planned to discontinue BlueStripe as a product and integrate it into System Center and the Operations Management Suite.
Improving Dynamics CRM was the focus of three separate acquisitions in the second half of 2015.
Adxstudio Inc. is another longtime partner that became part of Microsoft via acquisition. The company's Adxstudio Web portals are built natively on Dynamics CRM to allow customers to connect and engage with sales and customer services, according to Microsoft Corporate Vice President for Dynamics CRM Bob Stutz, who said the solutions will be available to all Dynamics CRM customers, both on-premise and in the cloud.
Microsoft also picked up FieldOne Systems LLC for its field service management solutions that include work order management, automated scheduling, workflow capabilities and mobile collaboration. Microsoft positions FieldOne as a fit with the functionality Microsoft acquired with Parature in early 2014.
Although the company name doesn't sound like it, the acquisition of Incent Games Inc. was also Dynamics CRM-related. Incent developed FantasySalesTeam, a sales gamification platform that Microsoft is integrating with its CRM product.
Microsoft had one other large acquisition in 2015, but it's on the pure gaming development side of the business. Microsoft bought Havok, the real-time 3-D physics creator, from Intel. Microsoft plans to include Havok in its tools and platform components for developers and to continue to license the development tools to Havok's existing partners.
Microsoft 2015 Acquisitions
Source: Microsoft Investor Relations
||Mobile Data Labs
||Incent Games Inc.
||FieldOne Systems LLC
Posted by Scott Bekker on December 16, 2015 at 10:04 AM