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In the past several years, Microsoft has changed their innovation strategy: invest rather than build. The latest of these is the $300M investment in the Nook division of Barnes & Noble. But this last deal isn’t a red herring.

List of Recent Microsoft Strategic Investments

Date Investment Size in $M Sector/Rationale
Oct-07 Facebook 240 Social / Ad deal + Bing integration
Oct-10 AppNexus 50 Ad tech / Shut down AdECN and rely on AppNexus for Real Time Bidding exchange
Feb-11 Nokia several billion Mobile / Develop hand sets for Windows Phone
Apr-12 Nook 300 Mobile / Develop content for Windows Phone

Microsoft has amassed a group of very powerful partners to help them grow and become more relevant. Facebook is integrated into many of Microsoft’s products including Bing and Windows Mobile. AppNexus is the backbone of Microsoft’s ad exchange. Nokia is a near exclusive handset partner and B&N will become a content distribution partner that may help Microsoft rival Amazon and Apple (at least that’s the goal).

To date, most of these investments are later stage. I suspect that Microsoft will become more aggressive with early stage investments as it builds its content ecosystem for its phone.

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3 thoughts on “Microsoft’s Innovation Strategy: Don’t Build; Invest.

  1. I am starting to become long MS. You forgot to add the skype acquisition in there. They are slowly piecing together an empire.

    • I didn’t include Skype because it was an acquisition but I does deserve mention.

      It remains to be seen whether msft can leverage their partnerships to success. The fb/bing integration hasn’t won much share. And the data on win phone is still far too early to say.

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