Microsofts deep pockets, not innovation, spur technology.

Microsoft can be called many things but almost never an innovator of new technologies. Rather than innovate, they dip into their substantial cash coffers and simply buy the next greatest thing in technology, then make it their own.

In its largest acquisition ever and the tech world’s most massive deal in years, Microsoft Corp. is buying Internet communications company Skype Global for a staggering $8.5 billion in cash.

“The combination will extend Skype’s world-class brand and the reach of its networked platform, while enhancing Microsoft’s existing portfolio of real-time communications products and services,” the companies said in a statement.

Previously, Microsoft’s biggest buy was $6 billion for online advertising firm aQuantive in 2007.

Don’t know what Skype is? Skype’s software allows users to talk for free online using messaging, voice and video and can also connect them to a land line or mobile phone for a fee. Users will now be able to connect to Microsoft offerings such as Lync, Outlook and Xbox Live, while Skype will support devices such as Xbox and Kinect, the companies said. 

Skype is owned by an investment group led by Silver Lake, which bought the real-time voice and video company from its previous owner, eBay, in 2009 for slightly more than $2 billion. It was founded in 2003 and now has 170 million connected users who chatted for 207 billion minutes last year. 

The company will become a new division of Microsoft and will be led by its current chief executive, Tony Bates. The combination, he said, will give Skype and Microsoft the competitive heft to combat Google and the Facetime video chat function from the Apple iPhone.

In review – here a list of 10 technologies Microsoft has “made its own”

Windows Azure
First, let’s be clear. There are good things being reported about Windows Azure from third parties who have their choice of cloud providers. But let’s face it — Google and Amazon.com have been in this space so long it makes the entire Microsoft cloud concept seem old.

 Bing
Search has been around for years. Before Yahoo! and Google took over, there was Alta Vista and others. Once Google turned simple search into a massively intertwined business, Microsoft wanted in — badly. And thus was born a Microsoft ad network, enterprise search and now Bing, a fresh stab at the browser wars. 

Windows GUI
This one is almost too obvious. Bill Gates, looking for the next innovation in OSes, used Mac fundamentals as the basis of Windows 1.0. On the flip side, Gates had multitasking long before Steve Jobs!

 Internet Explorer
Netscape wowed the world with its internet browser, then branched out into other areas such as mail and collaboration. Microsoft feared the browser was to some extent a platform, and that it could disrupt the Windows franchise. Microsoft bought a browser, tweaked and bundled it with Windows 95. Despite anti-trust losses, Microsoft still won this game.

 SQL Server
Sybase in the late ’80s was a rising database star, and Sybase SQL Server ran on larger systems. Microsoft wanted to bring this kind of solid relational product to a PC-based platform, so Microsoft, Sybase and Ashton-Tate formed an alliance. The code would be ported to PC servers, and Ashton-Tate would rejigger dBase to front-end SQL Server. But dBase was so fundamentally different it couldn’t work with SQL, leaving only Sybase and Microsoft. When Windows NT arrived, Microsoft split from Sybase, but kept components that remain the basis of SQL Server today.

Stacker
Stac Electronics built a utility that doubled the capacity of your hard drive through compression. Microsoft tried to strike a deal to embed a version of Stacker within Windows, but Stac said no, so Microsoft went ahead and wrote its own data-compression tool called DoubleSpace. Unfortunately, the Microsoft version violated Stac’s patents. Can you say lawsuit? Microsoft lost, but instead of just paying Stac off the $120 million it was ordered to pay, Redmond invested in the company and paid royalties to Stac, which ultimately folded.

Virtualization
Virtualization is the hottest thing to happen to computing since Dell laptop batteries started catching fire. Microsoft was late to the market with Hyper-V and crafted a strategy very similar to VMware, with PC- and server-virtualization tools. However, through its partnership with Citrix, and Microsoft’s own Windows Server Terminal Services, Redmond is also arguably a virtualization pioneer. 
Novell became a powerhouse through network OSes that mostly supported print and file services. Microsoft saw this huge market and made a move with Windows NT. IT pros loved NetWare, but Microsoft had advantages: deep relationships with CEOs and CTOs, and the fact that NT was a true partner of the Windows client, sharing an interface and many core functions. 

Windows Sever

Microsoft Word
The WordPerfect word processor came out around 1980, and as the decade progressed it became as dominant as Lotus 1-2-3 and Ashton-Tate dBase were back in their day. Microsoft wanted an application and OS, and WordPerfect was an obvious target. Microsoft Word came in 1983, and subsequent versions promoted compatibility — even keystroke compatibility — with WordPerfect. We all know who ultimately won this war.

Xbox
The Xbox may be the hippest game console out there, but Microsoft was way late getting into the video game business. Fortunately, Microsoft has yet to be hacked like Sony and now the Wii platform

Microsoft, unfairly or not, has a reputation for taking over areas invented by others and then dedicating massive corporate resources to owning those markets. Like it or not – I don’t see this process changing anytime in the future. The good thing is that we, as consumers, are usually the winners in these battles.

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