Why Microsoft bought Facebook?

Résumé du document

In this essay, we will try to find out why Microsoft bought the social website Facebook, spending $240 million. First, by defining and over viewing the current activities of Microsoft, this linked diversification can seem to be strategic nonsense and we can think that it would hardly fit into the current business portfolio. But looking at the new perspectives in the market, we can soon come to understand the strategy Microsoft is implementing, and which will achieve positive outcomes to the firm. On top of that, the competition from emerging companies can be a driving force, critical when taking into account this acquisition. At the end, we will see that the market and the environment in which Microsoft is playing in changing forcing the key players to implement innovative and challenging business models.

Extraits

[...] Why Microsoft bought Facebook? In this essay, we will try to find out why Microsoft bought the social website Facebook, spending 240 Million First, by defining and over viewing the current activities of Microsoft, this linked diversification can seem be a strategic nonsense and we can think that it would hardly fit into current business portfolio. But looking at the new perspectives in the market, we can soon come to an end that the new vision and strategy, Microsoft is implementing, will achieve to bring positive outcomes to the firm. [...]

[...] But the most unusual was the fact that Microsoft was buying a company that was not a competitor at all for software diffusion. This acquisition can be seen as the first step of the new Microsoft strategy explained few time ago by its CEO, Steve Ballmer We can identify two major reasons to explain this diversification: A necessary strategic diversification - Steve Ballmer presented a new vision for Microsoft's strategy, and a strong will to develop online advertising. As the software market can be seen as locked by Microsoft, it must find new sources of revenue, particularly through diversification. [...]

[...] Facebook is seen to be the most promising website in term of traffic generated but also in term of knowledge on every single user, permitting to provide efficient and personalised advertising message (50 Millions and a potential of 300 Millions users Countering new business models - Above that, emerging competitors must be stopped on the traditional core business of Microsoft, particularly Google, which plans to create a breakthrough strategy, by providing an online operating system called “Google Pack” with a large number of software already competing with existing Microsoft's products (Gmail, RealPlayer, Firefox, Google documents and Spreadsheets Google pack is currently free and earns money from the advertisement generated and personalized for each user. Thus, the business model Google is implementing will be an alternative to the pack Office”, and it can even become a substitute to Window operating system in the longer term, by grouping all this applications. Today, the most strengthening competitor for Microsoft is not Linux or a major software development company, but Google. They are already competing for advertising budgets on some common segments like Mail or search engine. [...]

[...] Microsoft is responding to Google by competing head to head for online advertising market shares. Bibliography Microsoft vise un quart de ses revenues dans la publicité en ligne en 2010 Article du 29/10/2007, in Les Echos Michel Ktitareff http://advertising.microsoft.com/advertising-online Microsoft Digital Advertising Solution website. Last access: 05/11/07 http://www.trends.be/fr/economie/high-tech/12-1637-43961/pourquoi- microsoft-valorise-facebook-a-500-fois-son-benefice.html Last access: 05/11/07 http://pack.google.com/intl/fr/pack_installer.html?hl=fr&gl=fr Google Pack Beta Website. Presentation and beta version. Last access: 05/11/07 http://www.google.com/google-d-s/intl/fr/tour1.html Presentation of Google Spreadsheets, original competitor of Microsoft Word Last access: 05/11/07 http://www.lepoint.fr/content/high_tech/article?id=206970 Article on Magazine Point”. [...]