Financials Mergers & Acquisitions

Microsoft buys Wand as it seeks to reinvent mobile experience

Second acquisition in a week, after LinkedIn, brings expertise in chat interfaces, to bolster chatbots and conversation-based user interfaces

After its massive acquisition of LinkedIn last week, Microsoft has further added to the software armory with which it will execute its ‘cloud first, mobile first’ strategy – increasingly one that is not tied to Windows. The company has acquired Wand, a chat application for iOS, which will be part of a development said to be close the heart of CEO Satya Nadella – making conversation the basis of computing platforms.

Nadella said, earlier this year, that he believed chat could be a platform for computing, and at the company’s developer conference, it showed off several technologies to further that aim, including intelligent chatbots.

These are designed to take key Microsoft web and mobile software, like the Bing search engine and Cortana virtual assistant, to the next stage in terms of responsiveness and context awareness. Driven by increasingly complex machine learning platforms, new user experience and services can be created, and Microsoft – firmly on the back foot in the mobile web world – is battling to leapfrog Google and Apple (both of which also pushed their AI-enabled digital assistants, Now and Siri, further to the heart of their platforms at their own developer events.)

The Wand team, including CEO Vishal Sharma (formerly of Google) will now join Bing’s engineering and platform group led by corporate VP David Ku, and will work on the broader intelligent chatbot and virtual assistant project.

Wand should fit neatly with this effort. Ku said the company comes with expertise in semantics and conversational interfaces, as well as ways to integrate third party developers into these emerging platforms.

Since 2013 it has been creating apps which allow users to chat, but also to add information and content from external sources like Yelp and music streaming services. Wand can be used to share content and to access other devices, such as home hubs – which were also central to Google’s and Apple’s developer jamborees over recent weeks.

The technology is early-stage – Wand had conducted trials of its service but has not launched it broadly. The service will be shut down with its functions being subsumed into the Microsoft development.

Those two companies want to extend the functionality of their smartphone platforms by extending them to homes and cars, in a bid to re-ignite consumer interest and sales growth. Microsoft is in a different position. It also wants to provide the over-arching software platform for the mobile consumer and enterprise, and for the smart home and vehicle, but has virtually no smartphone presence to use as its springboard. So increasingly, the mobile version of Windows 10 is sidelined, and even W10 itself is not the heart of the strategy.

Instead, this is about Microsoft creating ground-breaking experiences which are enabled by its cloud platforms and its AI engines, and which can run on any end user operating system. It has shown itself capable of driving the user experience forward innovatively – after years of clinging to old Window tropes, Windows Phone came with a genuinely different approach to the UI. Its lack of traction was not down to failures in the experience but the invincible market weight of Android and iOS. Having convinced many that it can finally think creatively, Nadella took the new Microsoft a step further by divorcing the mobile/cloud strategy from Windows, for instance when he symbolically introduced iOS versions of Office before those for Windows Phone.

He has not been bold enough in this regard – he has clung, inexplicably, to the handsets acquired from Nokia, and of course, W10 is a huge launch which cannot be disregarded. But at the mobile end, a new approach to usage, based around conversations and machine learning, is key, on any OS or browser (or device) a consumer may choose.

Of course, this acquisition, of undisclosed value, is small fry compared to the $26bn paid for LinkedIn, but is part of a strategy to snap up start-ups with experience in iOS and Android platforms – such as Acompli, acquired last year to accelerate the development of a new multi-platform Outlook app, Delve.
Delve is also part of Microsoft’s effort to reinvent the user experience, especially the mobile one, around conversation, collaboration and intelligent weaving together of many types of information and content. Delve, and other features emerging for mobile Office, are designed to achieve two key stated goals – to add intelligence to the software and to aid collaboration.

Javier Soltero – who heads up Outlook having come to Microsoft with Acompli – said in an interview last fall that his main challenge is to improve the intelligence of Office and Outlook by bringing together the complex mesh of documents and relationships which is being built around the platform. Delve and Microsoft’s Office Graph are central to that.

“I think for me the interesting part of Delve is not the app you see that shows you all the documents and so forth, it’s the Office Graph itself. Under the hood, what the graph is bringing up is relevant content of various types, that is a combination of documents, email messages, people, calendar events etc.”

LinkedIn, as it develops, will also feed into this vision of boosting productivity and usage with a hyper-connected platform. The two firms have complementary graphs in terms of the data they hold on their business users, and Microsoft will be looking for ways to use LinkedIn’s information to enrich its user experiences and cloud services for professionals, and feed into its data engine.

The acquisition’s immediate function will be to bolster Microsoft’s entrenched position in enterprise productivity. As business users go mobile-first, or mobile-only, they will only rarely be using Windows Phone (though Microsoft is hanging on to some business devices). So Microsoft’s real weapon is Office, and it needs to ensure this builds on its installed base by being increasingly functional and modern, on multiple mobile OSs.

LinkedIn will help enhance Microsoft’s mobile business credentials – it says it has seen 49% year-on-year growth in mobile usage of its service and 60% of its traffic is now on smartphones and tablets, with mobile traffic rising three times faster than its overall figure in Q415.

After the cash purchase is finalized, probably in Q416, LinkedIn will operate autonomously, with Jeff Weiner remaining as CEO and reporting to Nadella. The business social media service “will retain its distinct brand, culture and independence,” said the companies.

“We are in pursuit of a common mission centered on empowering people and organizations,” Nadella said in an email to employees. “Along with the new growth in our Office 365 and Dynamics businesses the deal is key to our bold ambition to reinvent productivity and business processes.”

He added: “Think about it: How people find jobs, build skills, sell, market and get work done and ultimately find success requires a connected professional world. It requires a vibrant network that brings together a professional’s information in LinkedIn’s public network with the information in Office 365 and Dynamics. This combination will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you’re trying to complete.”

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