Acquisitions Help Microsoft Make Up Lost Ground

Microsoft has a long history of buying technologies that it then integrates into its own products to make them more competitive, and 2007 was no exception.

The software maker made a number of acquisitions this year, both big and small, particularly in areas where it had either been late to the game (think unified communications) or where it faced enormous competition—on the advertising solution front.

Earlier this year Microsoft acquired Parlano and its Mindalign technology, an application for enterprise group chat that enables people to carry on topic-specific, multiparty instant messaging discussions that persist over time.

At the time of the deal, Microsoft said Parlano's group chat functionality would be added as a new feature of Office Communications Server.

That integration has not yet happened, as the deal was too close to the official launch of Microsoft Unified Communications, where it rolled out Office Communications Server 2007 and Office Communicator 2007, but customers should see the integration results in the first quarter of 2008.

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"Customers who have Software Assurance rights to the Office Communications Server 2007 Standard Client Access License [CAL], including those with Live Communications Server 2005 Standard CALs with active Software Assurance, will be given rights to group chat software based on Parlano's technology," Jevon Fark, a senior marketing manager in Microsoft's Unified Communications group, told eWEEK.

"We are currently on track to deliver this in the first quarter of 2008. Future versions of the OCS Standard CAL will include this group chat functionality as part of the license," he said.

The other 2007 Unified Communications-related acquisition was Tellme Networks, whose voice-enabled services and solutions for enterprise customers complement Microsoft's unified communications voice services portfolio. It will allow customers and industry partners to build highly scalable voice solutions that leverage rich identity, presence, messaging and application integration, Microsoft said at the time of the deal.

The Tellme technology has also not yet been integrated into OCS, but Fark said the integration work between the two companies is going well.

"Joint mobile services are already coming to market, and there have been two launches with Microsoft's Online Services Business: First was the use of Tellme's team and technology to build and power 1-800-CALL 411, while the second was the Sprint Windows Live mobile client launch," he said.

Read more here about Microsoft's Unified Communications product launch event.

Microsoft is also building plans to add Tellme's offering to its contact center strategy and to leverage Tellme's voice platform to power more of the contact center services, Fark said.

The other big grouping of acquisitions Microsoft made this year is in the advertising solutions space, where the software maker bought AdEcn, an advertising exchange platform company; the French company ScreenTonic and its mobile advertising solution; and aQuantive, a global digital marketing and advertising solutions firm.

Chris Swenson, director of software industry analysis at the NPD Group in New York, said that these acquisitions were necessary to help Microsoft better compete against Google's ad network as well as Adobe and its Flash platform.

"Fleshing out an ad network similar to Google's is an obvious priority if Microsoft is going to gain traction in this space. The deals with Facebook that Microsoft has made are meant to really help jump-start the network and make it competitive against Google's offerings," he said.

Microsoft's aQuantive buy shows its big ad plans. Read how here.

Part of Microsoft's rationale for acquiring several different pieces of the interactive advertising food chain is that it will be able to tell a more compelling story to developers and hopefully encourage them to consider Silverlight for some of their rich media advertising projects. Silverlight, formerly known as WPF/E, is Microsoft's cross-platform, cross-browser plug-in for delivering the next generation of user experiences and rich Internet applications for the Web.

This is a strategic and essential move that will help Microsoft take on Adobe Flash, which has really come to dominate rich media advertising on the Web.

"Sure, Microsoft developed fantastic technology in Version 1.0 of both Silverlight and the Expression tools used to create Silverlight content," Swenson told eWEEK. "It's really impressive how far Microsoft came in Version 1.0. However, there is a whole interactive advertising infrastructure out there that has standardized on Flash, and it's difficult to get some of these agencies and designers alike to move to a new technology."

Microsoft CEO Steve Ballmer expects to buy about 100 companies over the next five years. Click here to read more.

In 2006 Microsoft also bought a number of relatively small and interesting companies, whose technology found their way into shipping products.

Software from Onfolio that enhances the way people discover, save and reuse their personal and professional Web research was almost immediately incorporated into the Windows Live Toolbar, while the "Alohabob" technology acquired from Apptimum found its way into Windows Vista to help customers simplify the transfer of their applications to new computers.

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