Microsoft's Acquisition of R2 Studios

            

Details


Case Code : CLBS131
Publication date : 2013
Subject : Business Strategy
Industry :Software Services
Length : 06 Pages

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Abstract: ICMR India ICMR India ICMR India ICMR India RSS Feed

The case is about Microsoft Corporation's acquisition of the US-based id8 Group R2 Studios. The case discusses the need for the acquisition and the advantages that will accrue to Microsoft through the acquisition. It describes the competition in the home automation technology business and how Microsoft can use R2 Studios to grab a good market share in the business, which is an extremely competitive one.

Issues:

To discuss the need for acquisition and acquisition as a growth strategy.
To discuss how the acquisition of R2 Studios will help Microsoft.

Introduction

On January 10, 2013, Microsoft Corporation (Microsoft), the world's largest software services company, announced its acquisition of the US-based home entertainment automation control technology firm id8 Group R2 Studios (R2 Studios). The talks on the acquisition of R2 Studios had been underway since December 2012 and other companies like Apple Computer, Inc. (Apple) and Google Inc., (Google) were in the fray. However, it was Microsoft that finally emerged successful. Analysts opined that the acquisition would help Microsoft in giving a boost to its gaming division, Xbox.

Microsoft, headquartered in Redmond, Washington, was established by Bill Gates and Paul Allen in the year 1975. Since its inception, the company had used acquisition as its growth strategy. From 1987 to 2012, it acquired more than 100 IT firms. It made its first acquisition in 1987. The firm acquired was Forethought , which designed the prototype of PowerPoint. After that, Microsoft acquired several other firms. Since the 1990s, it had increasingly diversified from the operating system market and made a number of acquisitions. Its important acquisitions included Hotmail , Design Intelligence , Multimap , and Skype . From being a company that developed and sold interpreters for the Altair 8800 micro computer, Microsoft rose to dominate the PC operating system and office suite markets...

Key words:
Microsoft Corporation, Acquisition, Strategy, Growth Strategies, Gaming Consoles, Xbox, Entertainment Business, Home Automation Technology

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