The third era of the Microsoft saga has been marked with boom times under new CEO Satya Nadella, who has guided MSFT stock to 60%-plus gains since taking the reins on Feb. 4,.
Granted, stock performance might not be the lasting hallmark of Nadella’s time at the helm. Some cynical investors might simply point to Steve Ballmer’s absence as the reason why MSFT stock is hitting all-time highs today, as the former CEO actually steered Microsoft to a -35% performance since taking over for visionary Bill Gates in 2000.
Whatever Nadella’s impact, it’s fairly clear that a big part of the next chapter for Microsoft will include a focus on cloud computing, gaming and media — a point further illustrated by MSFT’s latest acquisition bid.
Microsoft reportedly is set to acquire Mojang AB — the brains behind the immensely popular game Minecraft — for $2 billion. And it seems like a logical strategy. After all, gaming is becoming an increasingly central part of modern tech behemoths.
Take Amazon (AMZN), for instance, which launched its first gaming app on iTunes earlier this month, and which also believes in the popularity of video games so much that it bought video-game-streaming site Twitch for nearly $1 billion in August.
Or even consider social media powerhouse Facebook (FB), which snapped up leading virtual reality headset-maker Oculus VR for $2 billion back in March. While the motivation for the deal was reportedly driven by Facebook’s futuristic vision to add an entirely new dimension to online social interactions, there’s no doubt that gaming telling what the Oculus project could morph into. Social gaming has certainly been a big part of Facebook’s evolution and could continue to be so depending on Oculus Rift’s potential.
Microsoft’s Minecraft acquisition simply aims to do what all modern tech giants want to do most desperately: attract users to its platform.
In the age of mobile devices and tablets, Microsoft’s operating system must ultimately remain relevant on new form factors as it struggles to compete with Apple’s (AAPL) iOS, and Google‘s (GOOG) Android.
Minecraft, which is not currently available on Windows Phone, serves to enhance Microsoft’s content offerings, and further boost the attractiveness of the Xbox platform. Microsoft might be overvaluing Mojang AB — the company brought in just $360 million in revenue last year, backed mostly by a 16-bit game with no guaranteed long-term viability — but considering Microsoft’s $86 billion in cash and short-term investments, it has the money to spend on propping up its platforms.
Ultimately, Minecraft won’t be a needle-mover for MSFT stock, which is far more affected by its Windows and other computing businesses, but the deal itself is a reasonable step in the right direction.”
As of this writing, John Divine was long AAPL and GOOG.
