Microsoft and Intercepting Strategic Vector

I’ve been very remiss about catching up on the blogs I enjoy reading. This morning, I rebuilt the entire site and had to repost every single entry because Yahoo will not provide support for MoveableType. One day soon, I’m going to post the entire customer support conversation. I get a kick out of it now that I figured out how to solve my problem.

So, here is an interesting post about start-up opportunities, cash, and Microsoft…

In 2004, Microsoft did something unprecedented — they gave a one time divided of $3/share. This was a total $32 billion divided. Amazing.

If you think they lowered their cash reserves, well, they did. However, check out this post from Don Dodge, a Microsoft Manager:

Microsoft is still sitting on $34.7B in cash even after the share buy backs and dividends. And, cash is growing at about $1B per month.

Now, I’m no accountant, but this tells me that in less than 20 more months, they’ll be sitting on the same pile of cash they had in 2004. Will another dividend be offered? Who knows..?

This does tell me that Microsoft will be spending a lot of cash over the next year. We all know that they will launch Vista and Office 12. I imagine they’ll also spend a bit on their other business servers next year. So, let’s say that’s $2 billion. Well, there’s 2 months of accumulation.

Here’s where the opportunity lies: intercepting the strategic vector and getting purchased by Microsoft. What’s the strategic vector? I’m not sure if its an official academic term, but when I spent time at the MIT EDP program, one of the professors talked about it. The basics are: plot your company strategy to meet any megacorp’s strategy and you stand a good chance of getting picked up (or off!) by them. Cisco and other large companies have been buying companies and venture funding others that have a technology that the megacorps might not be able to develop in house in the same time frame.

In the past few years, Microsoft has not had the phenomenal growth they used to enjoy. This results in a need to grow revenue to please Wall Street and the internal perception that all this cash is required to fight Google and Yahoo. In order to grow, Microsoft may continue to acquire. It could be cheaper than internal innovations.

So for all you aspiring entrepreneurs out there, get to work! Microsoft is sitting on a pile of cash and its growing faster than they can spend it. Build a cool add in to Visual Studio that allows easier AJAX development. Figure out how to make Project easier to use! Build widgets for Windows Live!