February 12, 2008 11:34 AM PST

Microsoft's acquisition track record

Posted by Ina Fried

Update 1 p.m. PST: Added analyst comments throughout.

While Microsoft is no Oracle when it comes to acquisitions, the company has been getting accustomed to cracking open its oversized wallet.

Historically, Microsoft has focused largely on smaller deals to acquire technology, as opposed to megadeals to buy established businesses. Microsoft is, of course, in the throes of a multibillion-dollar bid for Net pioneer Yahoo.

"It's a different type of acquisition for Microsoft," Directions on Microsoft analyst Matt Rosoff said of the Yahoo bid. "It's a new way of thinking." (Rosoff is a contributor to the CNET Blog Network.)

The company has made a few larger deals over the years. (Check out the chart to see the details.)

Microsoft buys Although Microsoft isn't known for its massive acquisitions, the company has made some sizeable purchases over the years. Here's a look at some of the company's largest deals.
Company	Year	Estimated cost
Fast	2008	$1.2 billion
Aquantive	2007	$6 billion
Tellme	2007	$800 million
Navision	2002	$1.33 billion
Great Plains	2001	$1.1 billion
Visio	1999	$1.3 billion
Hotmail	1998	$400 million
WebTV	1997	$425 million
Source: CNET News.com

The Internet has been the source of several of Microsoft's biggest purchases, dating back to the purchase of WebTV and Hotmail in the 1990s, both deals that set back Microsoft by several hundred million dollars.

WebTV's subscriber base of folks using their TVs to get their e-mail largely plateaued at the 1 million mark, making the deal pricey from that standpoint. However, both the technology and the people helped form the basis of the Microsoft TV unit, which now focuses on Internet Protocol television. Hotmail was left alone for years, but has assumed new prominence as part of Microsoft's broader Windows Live push. As for the economic return, Web-based e-mail has not yet proved to be a huge money maker for any of the market leaders, though Google, Yahoo, and Microsoft are working hard to change that.

Microsoft used several purchases, most notably that of Great Plains Software in 2001 and Navision in 2002, to get into the business application space. The company has a decent-size business with its Dynamics line, but efforts to unify the products have proved thorny from both a technical and customer acceptance standpoint.

Microsoft painted a much brighter picture when it bought those companies, Rosoff said. "Those expectations weren't met."

It's too soon to say how Microsoft will fare with two recent acquisitions, including Microsoft's $6 billion purchase of Aquantive, as well as last year's purchase of Tellme Networks. Microsoft certainly has big hopes for both--counting on Tellme to help in everything from the Office unit to mobile search and hoping Aquantive will make it a more serious player in the online advertising space. But if Aquantive is a big bet on online advertising, Microsoft is more than doubling down by pursuing Yahoo.

Also, while Microsoft likes to point to its track record as a reason why it will be able to handle integration issues, it's important to note that almost all of these acquisitions took Microsoft into new businesses, with minimal overlap. A purchase of Yahoo will have tons of overlap, not to mention all of the cultural issues. Oh yeah, and there's also the matter of Yahoo not returning Microsoft's phone calls.