Earlier this week, Microsoft spent $250 million on acquiring SwiftKey, a smart keyboard that uses artificial intelligence to predict sentences. This acquisition — which was confirmed by Microsoft on Wednesday — is the latest in a line of acquisitions from the company — which includes Wunderlist, a to-do app, Sunrise, a calendar app, and Accompli, an Outlook client for iPhone — that compliments existing or growing businesses.
All of these acquisitions, spearheaded by CEO Satya Nadella and Peggy Johnson, the head of business development, show a new, more agile Microsoft that is willing to splash the cash to get talent and ideas.
As I've argued before, Microsoft is working internally on a range of artificial intelligence-related projects and is boosting those efforts by acquiring some high-profile startups, many of which deal in artificial intelligence or productivity.
SwiftKey, for example, said in the blog post announcing the deal that the app has saved around 10 trillion keystrokes across 10 languages. According to the company's calculations, that's around 100,000 years saved in total.
Acquiring Accompli, which is one of the best Outlook apps for iPhone, helped Microsoft gain a foothold on the platform and, in turn, rebuild its own Outlook app, which was lacking.
It wasn't made clear in the announcements surrounding the deal, but they are likely the brainchild of Nadella and Johnson who was, according to Nadella, his first outside hire when he started in the top job.
This pattern of acquiring startups will continue as long as Nadella holds the top job. Microsoft has collectively realised that it cannot work on its own, especially now that it doesn't control the big platform — iOS or Android — where the majority of people spend most of their time.
Who Microsoft will acquire next is a closely guarded secret within the company, but it's possible to make guesses based on where Satya Nadella has said the company is going and who it has bought before.
So, here are the best guesses — and suggestions — about who Microsoft should acquire next.
Box is a San Francisco-based company — formerly a startup — that offers online cloud services to big businesses. Unlike Dropbox, which has an uncannily similar name, Box exclusively deals with enterprise clients and, according to CEO Aaron Levie, is has some big names on board.
The company went public last year and is currently valued at a little under $1.4 billion, down from an all-time high of around $4 billion at the time of its initial public offering.
What Box has, that Microsoft should want, is technology that could be built into Office 365, one of the most important products the company currently sells. While this idea — buying a enterprise-focused company to build it into Office — sounds very un-sexy, it's something Microsoft needs to do, especially as the cloud business grows.
Last quarter, Microsoft brought in around $6.9 billion in cloud revenues and that number is only set to go up. Buying Box, which is expanding at around 40% every quarter, would shore up these offerings and put Azure and Office way ahead of the competition, namely from Amazon.
Salesforce is another force of nature in the enterprise world, offering services to businesses that bring in around $1.4 billion in revenue per quarter.
For a company with around 16,000 employees that was founded in 1999, that's impressive. At its current stock price, Salesforce is valued at $44 billion.
Microsoft has been rumoured to be looking at Salesforce in the past, but the deal has never materialised and it would seem like now — with Nadella and Johnson at the helm — that it could. In fact, the last time the rumour circulated, Salesforce's stock went up, showing that investors are excited about a potential deal.
In terms of what Salesforce could offer Microsoft, it has the best customer relationship management (CRM) software in the business, and it has got some other big businesses hooked. According to the company, over 100,000 businesses currently use its products.
If the acquisition of SwiftKey shows anything, it's that Microsoft is committed to building artificial intelligence software for the world. The acquisition of Wolfram Alpha, a little-known tool developed by Wolfram Research, would help the company massively.
The premise of Wolfram Alpha, which is available online and as an app, is to be like Google, but much, much clever at certain calculations and queries. For example, Alpha can calculate the stock price of two companies, such as Apple and Microsoft, over time, plot that on a graph, and tell you the market cap, too. All of that is done by searching "MSFT vs AAPL."
A lot of big-name companies and organisations, including the FBI, use data gathered and presented by Wolfram Alpha, and it would seem like a smart, and probably relatively cheap, deal for Microsoft to be making.
Besides the AI knowledge, Microsoft could also start building Wolfram Alpha into Cortana, the virtual assistant, as a way of providing deeper knowledge. Siri, Apple's assistant that comes on the iPhone, has data from Wolfram Alpha integrated into it already.
It's unclear what the value of Wolfram Alpha is per se, but Microsoft is a rich company and it's clearly willing to splash $250 million (or more) to further its goals.
Evernote is reportedly in trouble, but that doesn't mean that Microsoft wouldn't benefit from the software that the company has made.
Evernote the app, rather than the company, has been used to write books, essays, and keep track of ideas and has tens of millions of users, some of whom even pay for the service. For Microsoft, the benefit in buying Evernote would be to bulk up Office and, more specifically, OneNote.
Just as Microsoft bought Accompli for Outlook, Evernote would work well if it was rolled into OneNote and the skills of its employees migrated into the Office team.
In the three months leading up to January, more and more companies added Office 365 to the existing Microsoft software deals they had, meaning that the productivity suite is clearly a selling point. Anything — or, more specifically, any company — that can augment that is worth it, even if it costs $1 billion (the rumoured valuation of Evernote).
Valve: Microsoft has already Xbox as its gaming success, but it wouldn't hurt to acquire Valve, the company behind Steam and hit games like Half-Life and Portal. Windows 10 is, according to various analytics companies, a hit with gamers already, too.
Magic Leap: Despite not having a product on market, Magic Leap is one of the most hotly covered augmented reality companies around. Microsoft is bringing HoloLens, also an augmented reality project, to market at the end of this year, and so buying the company would make sense. If the demos Magic Leap has shown are to be believed, it's going to be pretty special.
Adobe: Microsoft now has the Surface, which is a hit among creative professionals because of the Pen, and it would seem like Adobe, which makes Photoshop among other products, would be a good fit. The company also makes various other software products, many of which are aimed at businesses — or, to put it more specifically, are exactly Microsoft's kind of business.
Do you agree or disagree? Which companies do you think Microsoft should have its eye on?