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When Microsoft acquired Skype Technologies for $8.5 billion in 2011, it was the company's largest acquisition ever at the time, valued at nearly 32 times Skype's operating profits.
The deal signified Microsoft's push to compete with other tech giants in the increasingly significant video calling and digital voice markets.
It also marked Microsoft's continued transformation beyond software into online services and platforms under CEO Steve Ballmer.
By acquiring Skype and its vast base of millions of connected users worldwide, Microsoft aimed to integrate the popular communications tool broadly across its offerings like Xbox, Outlook and Office.
It enabled new functionality like screen sharing and elevated group video chat.
The very high price tag relative to Skype's revenues showed Microsoft's acknowledgement of the importance of cross-platform video calling to the future of collaborative communication.
Although criticized by some analysts for vastly overpaying, in many ways Microsoft's long-view focus and commitment to digital transformation was validated as video and voice tools became indispensable across workplaces and consumers globally in the following decade.
In 2013, Microsoft acquired the mobile and devices division of Nokia for $7.2 billion.
This marked Microsoft's push into the mobile hardware market, as Nokia was a leading manufacturer of mobile phones and smartphones.
At the time, Microsoft's Windows Phone operating system was struggling to gain traction against competitors like Apple's iOS and Google's Android.
By acquiring Nokia's phone division, Microsoft gained the ability to control both the software and hardware for Windows Phones. It was seen as an attempt to replicate Apple's integrated model.
The deal gave Microsoft access to Nokia's global manufacturing, sales and distribution networks to boost Windows Phone.
However, despite the high price tag, Microsoft continued to lose the mobile OS market share battle. In 2016, Microsoft sold off Nokia's feature phone line and moved away from its mobile hardware ambitions.
Ultimately, acquiring Nokia proved to be an expensive gamble that failed to make Windows Phone a leading mobile platform.
But it showed Microsoft's recognition that controlling both software and devices would be key to competing in the mobile space in the future.
In 2014, Microsoft acquired Mojang, the software company behind the popular game Minecraft, for $2.5 billion.
This deal gave Microsoft control of the massive global phenomenon Minecraft, with its legions of dedicated young fans.
At over $2 billion for a game with such simple graphics and gameplay, analysts and investors questioned if Microsoft overpaid.
However, Minecraft gave Microsoft an incredibly popular title to drive gamers to its Xbox platform and brought a new demographic into Microsoft's ecosystem.
Since the acquisition, Minecraft has continued to be hugely successful, consistently one of the top games streamed and watched online.
Microsoft has released new Minecraft expansions, merchandise and initiatives like the Education Edition tailored for classrooms.
While risky and criticized by some at the time, the Minecraft acquisition showed Microsoft's willingness to make big bets to remain relevant in the gaming industry.
It brought a new crown jewel IP into the Microsoft gaming fold which continues to enthrall young audiences and likely will for years to come.
In 2016, Microsoft acquired the professional social network LinkedIn for an eye-watering $26.2 billion.
It was Microsoft's largest acquisition by a wide margin at the time, reflecting LinkedIn's market-leading position and the high premiums for social media networks then.
Many questioned if Microsoft overpaid for LinkedIn and if it could successfully integrate such a large social platform into its enterprise software offerings.
However, Microsoft saw LinkedIn's over 400 million users as incredibly valuable for bolstering its productivity tools like Microsoft 365.
Post-acquisition, LinkedIn maintained its brand independence but was more tightly coupled with Microsoft products to enhance professional connections and workflows.
Tapping into the incredible professional datasets from LinkedIn also boosted Microsoft's move into AI and analytics.
While $26 billion sparked major sticker shock in 2016 and carried risks, in the years after, the strategic value of LinkedIn to Microsoft's ecosystem approach has become clearer.
The professional network gives Microsoft both vast social data and tighter enterprise alignment, positioning itself at the center of professional productivity globally.
In 2018, Microsoft stunned the developer world by acquiring the code hosting platform GitHub for $7.5 billion.
Up until then, GitHub had operated as an independent company and was seen as an integral open-source infrastructure for developers globally across major tech corporations and startups alike.
The high price again showed Microsoft's willingness to make huge bets to win over new audiences, in this case the invaluable pool of software developers.
Given Microsoft's historical tensions with open source communities, skepticism arose on how GitHub would operate post-acquisition.
However, Microsoft has largely taken a hands-off approach, allowing GitHub to run independently while enabling tighter integration with Microsoft developer tools.
This has maintained GitHub's neutral status while opening up Microsoft ecosystems to millions of developers already using the platform.
While still early, the GitHub deal is seen as a major win in Microsoft's pivot to open source and gaining ground with the vital developer community, allowing the tech giant to meet users wherever they are rather than forcing them into proprietary products.
The long-term strategic value of that goodwill and reach with developers is immense.
In 2020, Microsoft made a major expansion into gaming by acquiring ZeniMax Media, parent company of the game publisher Bethesda, for $8.1 billion.
This brought popular game franchises like The Elder Scrolls, Fallout and Doom into the Xbox ecosystem.
At the time, it was Microsoft's second largest acquisition behind the LinkedIn purchase.
While surprising in its vast scale and scope, this deal showed Microsoft's commitment to invest heavily in gaming as interactive entertainment continues to go mainstream.
Owning studios outright with fan favorite titles like The Elder Scrolls is a key driver for Microsoft's Game Pass subscription service and cloud gaming ambitions.
It signals a recognition that top-tier original IP and content will determine winners in the gaming wars to come against the likes of Sony.
While these multi-billion dollar acquisitions do not guarantee success, Microsoft's willingness to buy its way into gaming empires with cherished franchises illustrates its long-game mindset and aiming to meet audiences with premier content across devices and platforms.
Only time will tell if such huge bets pay off.
In 2021, Microsoft continued its acquisition spree by purchasing Nuance Communications, a leader in voice recognition and healthcare AI applications, for $19.7 billion.
This second-largest purchase to date shows Microsoft’s focus on artificial intelligence and cloud services for specialized industries.
Nuance provides voice-based software that transcribes physician-patient conversations.
Integrating Nuance’s healthcare solutions with Microsoft’s cloud and AI provides significant growth opportunities in the healthcare IT market.
However, the high price stunned some analysts, valuing Nuance at about 56 times forward earnings.
But Microsoft likely sees untapped potential in Nuance’s voice and language data applied across industries. Post-integration, Microsoft has marketed Nuance products to existing cloud customers.
The Nuance deal displays Microsoft’s faith that voice-based interfaces will expand beyond consumer uses like Siri into mission-critical enterprise environments like healthcare.
After previous multi-billion dollar purchases like LinkedIn and Github paid off, Microsoft again shows its willingness to make pricy calculated bets on technologies it believes are pivotal for the future.
In January 2022, Microsoft made shockwaves by announcing plans to acquire gaming giant Activision Blizzard for a staggering $68.7 billion, surpassing the LinkedIn purchase as its largest-ever acquisition.
This deal cemented Microsoft's status as essentially the Netflix of gaming with the scale of subscribers and IP catalog comparable to entertainment and streaming giants.
The deal brought blockbuster franchises like Call of Duty, World of Warcraft and Overwatch under Xbox's roof.
With Activision Blizzard facing scandals around toxic workplace culture, Microsoft likely saw an opportunity to swoop in and gain superb gaming assets at a reasonable price despite the extremely high absolute number.
At nearly 70 billion dollars, the seismic deal drew antitrust scrutiny for Microsoft gaining so much influence in the rapidly growing interactive entertainment sphere.
But a year later, regulators approved the purchase and Microsoft seems well positioned to shape the future of digital gameplay powered by cloud infrastructure and Xbox Game Pass monthly subscriptions.
Only Apple, Google, Amazon and Meta would have the resources and ambition in tech to swallow giants like Activision Blizzard whole.
This concentration of power does risk dampening innovation industry-wide.
But Microsoft time and again has shown its willingness to make these calculated mega-bets on industries and platforms it believes are key to the future.
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