One thing many consumers don’t realize is that many of the most prominent technologies from companies such as Google and Microsoft were not necessarily developed in-house. In fact, some of the most famous technologies of both companies were acquired through a corporate acquisition. Having a corporate acquisition team that understands technology innovation and is passionate about future technologies can be as important as having future-minded engineers and product developers. 

Business Insider has two great articles, one detailing the largest acquisitions of Microsoft (except for Skype) and one for Google (except for Motorola). 

Let’s take a look at Google:

DoubleClick was Google’s largest acquisition before Motorola, at $3.1 billion. This brilliant acquisition gave Google relationships with every major online publisher and more than half of the online ad agencies” and good technology for the “display advertising business: banners, videos, and other so-called display ads.”

YouTube, at $1.65 billion, takes second place. At the time, many people thought that YouTube not having any significant revenue stream was a major problem, and from a purely financial perspective it was. That’s where the innovative nature of Google’s M&A team and higher management really shows up. Google expanded into a space that has now resulted in more than $1 billion in annual revenue.

Other products that resulted from acquisitions are Gmail, which came out of Postini ($625 mil), Adsense, Google’s largest revenue generator, which came from Applied Semantics ($102 mil), and perhaps Google’s best deal yet, Android, which came from the approximately $50 million acquisition of Android. 

Google has made a handful of acquisitions that didn’t quite pan out such as ITA (travel service) and Slide (social gaming). It’s too early to say whether the more recent Motorola Mobility acquisition will be a great decision, but commentators are saying it wasn’t Google’s best acquisition for sure.

Now let’s take a look at Microsoft:

First off, Microsoft has a much longer acquisition history, but BI just took a look at some of the more recent transactions.

aQuantive was Microsoft’s largest acquisition at $6 billion before Skype. Some viewed it as a response to Google’s DoubleClick acquisition. But to be fair, Microsoft had also bid on DoubleClick as well, so it clearly had intentions of growing its display advertising business. Unfortunately aQuantive’s technology didn’t get integrated very well so this acquisition was definitely too expensive.

Another acquisition mistake was Danger, at about $500 million. Microsoft had a Danger team developing the Kin mobile phone at the same time as a separate group was developing the Windows Phone 7. Microsoft pulled the Kin phone after two months of poor sales. This acquisition seems mostly a loss.

TellMe has provided good voice technology for Kinect. It’ll be interesting to see if the technology will be deployed to compete with Apple’s new Siri voice technology on the iPhone 4S.

Going back a bit, Microsoft acquired Visio “for stock worth about $1.3 billion in 1999. This one probably paid off: Microsoft still sells Visio and updates it with every Office release, and is estimated to have sales of several hundred million dollars a year.

The acquisitions of both Navision and Great Plains have done pretty well for Microsoft’s Business Solutions/Dynamics products, specifically its CRM software.

Microsoft's acquisition of Skype is quite interesting. The first of the two recent big acquisitions between Microsoft and Google, Microsoft seems to have captured a high potential technology. I myself use Skype quite often to communicate with my family back home and love the software. Microsoft has a huge opportunity to integrate the technology into its communications offerings. Microsoft would probably do fine to let Skype continue running on its own, but in order to capture the full synergy of this acquisition, Microsoft should use its current distribution channels to further Skype's market penetration. This interesting article on ComputerworldUK points out that Skype will likely be integrated with the Windows Phone and perhaps Facebook. Another more intriguing idea would be to have Skype become a part of the Windows OS.

Best Acquisition

Between the two companies, perhaps the best acquisition award goes to Microsoft for its acquisition of Bungie at around $30 million. Bungie developed the game Halo for Xbox, which arguably propelled Xbox to the top spot in the gaming console market.

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