Microsofts Acquisitions Underscore Its Focus on Mobility, Collaboration

By Jeffrey Burt  |  Posted 2012-07-20 Print this article Print

€œThe competitive advantages thus far for and Google have been in their ability to deliver both functionality and collaboration capabilities to customers,€ Krans said. €œWith the acquisition of Yammer, Microsoft can better position itself against and Google by providing a platform for employees to collaborate both internally with co-workers and externally with customers.€

But as the software giant focuses on business, which is clearly its strength, Microsoft will still have to figure out how to shore up its consumer segment, according to Rob Enderle, principal analyst with the Enderle Group. Being strong in both enterprise and consumer will be important in a world where trends like bring your own device (BYOD) are blurring the line between the two.

€œConsumer is where the excitement generally is, and consumer is the seed corn for business,€ Enderle said in an email to eWEEK. €œStrategically, losing dominance in consumer may precede losing dominance in business, so Microsoft's future is tied to their recovering their consumer momentum and on the success of both Windows 8 and Windows Phone 8.€

CEO Steve Ballmer €œhas a history of under-resourcing [the consumer] space,€ Enderle said. However, the hiring this week of Mark Penn, a former White House advisor and CEO of the Burson-Marsteller PR firm, as corporate vice president of strategy and special projects, reporting directly to Ballmer, could help fix €œwhat has been a decades-long problem,€ Enderle said.

Online is also an area where Microsoft will continue to put a lot of investment. During a conference call with journalists and analysts July 19, chief financial officer Peter Klein called Web search a €œstrategic asset€ for the company, adding that revenue for the company's online division jumped 8 percent in the quarter.

However, it was the $6.2 billion write-down of Microsoft's ill-fated $6.3 billion acquisition in 2007 of aQuantive that helped swing the company to its first-ever quarterly loss. Microsoft bought aQuantive in hopes of bolstering online advertising revenue, but the gains never materialized. Enderle said the company is struggling to embrace the concept.

€œThey are having difficulty with ad revenue on the Web,€ he said. €œAs a packaged software company and increasingly [a] business solutions company, ad funding is apparently coming harder for them than expected. It is a difficult concept, though, where the folks you provide products for aren't the ones paying you. It may simply be too foreign to their culture for them to ever get their arms fully around it.€

However, the company will continue to push its Bing search engine. Though a distant second to Google, it appears to be making some headway.

Experian Hitwise reported that Bing's share of the search market jumped 5 percent in May, to 28.1 percent, while Google's dropped 5 percent, to 65 percent.


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