Analysis: Microsoft Missed Mobile, So It’s Buying Its Way In
For most of Steve Ballmer’s long tenure as Microsoft CEO, the company’s cash-cow applications for white-collar workers were a very effective way to keep people using its PC operating system.
But Microsoft whiffed badly on the mobile revolution, letting Google and Apple control the next major computing platform. In mid-2013, after years of speculation, Microsoft finally relented and released versions of its Office apps for iPhones. Two months later, Ballmer was out.
Under new CEO Satya Nadella, Microsoft has noticeably changed its tune. On Wednesday, a report from TechCrunch added another note: Microsoft is reportedly paying around $100 million for Sunset, a New York-based startup that makes a popular mobile calendar app.
The purchase appears to be part of a multi-pronged strategy by Microsoft to make sure its productivity apps have a fighting chance on mobile, no matter who owns the platform.
As Nadella said in his initial e-mail to employees, “Our job is to ensure that Microsoft thrives in a mobile and cloud-first world.”
The first key part of that approach was the long-anticipated debut of Office for the iPad, the center of Nadella’s coming-out party a month after getting hired. By the end of the year, Microsoft had changed course and released free versions of its Office suite for iOS and Android, and acquired startup Acompli, which made an elegant and popular mobile e-mail app.
Acompli became the basis for a new version of Microsoft’s Outlook e-mail app, released in January. That brings us to this week—Nadella’s first anniversary as CEO—and the Sunrise acquisition.
Buying upstarts like Acompli and Sunrise is often a good way for big companies to play defense, co-opting an innovative competitor before it has a chance to eat into your user base. In today’s tech industry, where mobile platforms and relatively cheap cloud computing have made app development much easier than in years past, acquisitions are also a key way of adding big talent to your roster—look no farther than Facebook, which has paid big bucks for startups like Instagram and WhatsApp to make sure it has a foothold in mobile.
Sure, it’s probably no mistake that this Sunrise acquisition is surfacing just a week after Microsoft’s ho-hum earnings report—early indications were that the stock market liked the idea of more mobile application buys.
But it’s probably a good sign for Microsoft’s overall health, reflected in one of Nadella’s key messages when he was hired. For a company that had been too often willing to look backward, he told employees, “Our industry does not respect tradition—it only respects innovation.”
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