Microsoft may be ready for buying spree

MICROSOFT'S DECISION to splash out $6 billion for online ad firm Aquantive is by far the firm's biggest acquisition yet and could mark a change in its attitude towards acquisitions.

The conventional wisdom regarding Microsoft has always said that it is a company culturally or philosophically averse to big deals and, until now, the evidence has backed that up. Even its biggest deals such as Navision, Great Plains and Visio all came in at around $1.4 billion, suggesting that Microsoft had placed an embargo on acquisitions beyond that size.

The Aquantive deal suggests that ceiling has gone and other circumstantial evidence adds weight to the feeling that Microsoft may finally be ready to use its financial muscle.

First up, Bill Gates is edging out of the picture, a situation that might leave Steve Ballmer with more freedom to deal.

Second, Ballmer needs to make sense of Microsoft's internet business and needs to do something radical to catch up with Google. The recent reports of Yahoo talks suggest that very big transactions will be considered.

These deals needn't be limited to the Internet, however, and previous acts suggest Microsoft could also stretch to other areas where it is struggling to make an impression. One example could be enterprise applications and the disclosure that Microsoft held merger talks with SAP in 2003 over what would have been the biggest merger in IT history is highly instructive.

Enterprise content management could be another area where a buy could make Microsoft a contender. Alternatively, a deal to buy a company with domain knowledge in software as a service could make sense.

Companies such as Oracle and Symantec are showing that tech mergers and acquisitions needn't be risky. Don't be surprised if Microsoft follows their lead - it certainly has the cash to do so. µ

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Microsoft pays over the odds for online ad firm