Companies that bought Yahoo! also bought . . .

On the theory that, whether I want to or not, I'll be writing a lot about Microsoft's acquisition of Yahoo! for the foreseeable future, I've been looking at the software giant's purchase history – 116 companies, according to Wikipedia, not including the Catholic Church. (You'd forgotten that one, hadn't you?)

The deals range from the mobile phone company Danger earlier this month all the way back to Forethought, the company that developed PowerPoint (initially a Mac product, ironically), in 1987.

If you look for themes in the list you'll find support for the idea that Microsoft increasingly regards innovation as something you buy, not something you make (75 acquisitions in the eight years since 2000 versus 41 in the 13 years before that).

You'll also see that at various times, Microsoft has focused on various technologies. The $44 billion offer for Yahoo! has but the spotlight on Internet advertising (the Yahoo! deal is just one in a long string that includes, most recently, AdECN and aQuantive – at $6 billion, the biggest ticket to date). Microsoft has also been spending aggressively in the in the mobile/VoIP/voice space (Danger, Tellme, ScreenTonic) and Web sites and services (Caligari, Jellyfish, Multimap).

But in terms of sheer numbers over time, the acquisitions have favored core systems-and-servers features and functionality and business applications that mesh well with its existing products.

At least a couple of acquisitions have been clearly aimed at acquiring not the companies, but the people ran them – Groove Networks in 2005 (which freed Ray Ozzie up to become a CTO for Microsoft), and Winternals in 2006 (founders Mark Russinovich and Bryce Cogswell understand Windows design better than Windows' designers).

What doesn't show up in a close reading of the list is any sense of a grand plan -- which substantiates a claim made a couple of years ago by Don Dodge, a manager on Microsoft's Emerging Business Team, that there is no central control. In his blog he wrote:

One thing to remember about Microsoft . . . the product groups run the company, and they all work largely independent of each other. They make the decisions about what to acquire and when. There are acquisition teams but they tend to be called in to execute the deal after the product groups have decided what they want to do. So, there will not necessarily be a high level strategy that all these acquisitions fit into, but they make sense on an individual basis.

Acquisitions are rarely made based on revenues or profits, Dodge writes, but typically focus on acquiring good people, technology that compliments an existing product set, shortening time to market, or providing entry into a new market.

I suspect a $44 billion offer required a little more central authority than the typical $50 million to $200 million deal that Dodge cites as the "sweet spot" for Microsoft acquisitions. But these numbers lend some perspective on Microsoft's actions.

The sheer size of the offer indicates just how convinced Microsoft is that Google's success puts its future is in jeopardy. The last time it took an action this drastic was probably when it bundled Internet Explorer into Windows to kill Net – and wound up losing an anti-trust case.

And the idea that Microsoft would spend $20 to $30 million on a proxy fight to pack Yahoo!'s board of directors doesn't seem outrageous at all – that's just pocket change, even in the context of Microsoft's more normal deal-making.