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Analyzing Microsoft's $81 Billion Of Investments & Acquisitions – They're Betting on an AI Metaversical World.
Microsoft has completed its $69 billion acquisition of Activision, its largest in 50 years. Add that to their OpenAI investment, and what do you see?
🕒 Here‘s a TLDR summary:
🕹️ Microsoft just closed their acquisition deal of Activision, a huge gaming company that created games like, “Call of Duty.“
💰 The $69 billion acquisition is the largest they‘ve ever done in their history. LinkedIn comes next with $26 billion. Activision‘s revenue last year was $7.5 billion. They’re competing strongly to become the biggest gaming company. At the moment, the first spot goes to Sony.
🤖 Parallel to that, they‘ve invested in OpenAI over $13 billion. They wanted to integrate their generative AI into Bing and Office products. So far, this move has proven to be quite strategically successful and even threatens Google.
🔎 Zoom out from all of this, and you‘ll start to see a picture of what‘s going on — Microsoft is drawing a metaversical (that‘s an invented word) AI world.
If you‘re a fan of videos, my designer created a wonderful video that showcases Microsoft‘s strategical moves in the AI industry. You‘ll like it → Video.
Let‘s say you‘re a young Bill Gates. If someone tells you you‘ll create a huge tech company called Microsoft, would you believe them? Why wouldn‘t you? You‘re a kid full of ambition.
But if that same person tells you that it‘s also going to have a market cap that is bigger than the GDP of Canada. That‘s where you draw the line and show this person the door.
Microsoft has grown beyond the dreams of Bill Gates and the late Paul Allen. Actually, it grew beyond the dreams of anyone who was associated with it. But putting some software on a computer does not keep you on top of the game.
The truth is, it gets more difficult in time. Suppose your company‘s valuation grew tenfold in the past ten years because of an “innovative“ product. You need to start planning something new for the future. If not, you‘ll be out before you know it.
Satya Nadella, Microsoft‘s CEO, knows that pretty well. They have products that have almost not seen any growth and others that are now a part of every employee‘s life.
Let‘s analyze two strategic moves they did to shape the future: investing in AI & buying a huge gaming company.
Microsoft‘s AI future
Artificial intelligence is kind of a big topic. Their investment in OpenAI isn‘t enough to cover their whole AI contribution. But it is a piece of the puzzle.
Firstly, my designer created this video that explains it quite well; check it out (It‘s narrated by me):
Microsoft‘s investment in OpenAI is mostly about generative AI. Concepts similar to ChatGPT and their integration with Microsoft Office or Bing are the main focus at the moment.
Being able to generate an AI-written presentation in a few minutes will spare you tons of time. When a company spares you time, they add money to their wallet. It‘s that simple.
Of course, adding to that the fact that you might use Bing because AI-search is a huge plus. Imagine a search experience with no ads or SEO articles.
Generating AI content is quite cool. But it‘s not an experience at the end of the day. It‘s just some text or images used in something, probably professional. It‘s not like this AI tool is talking to you, is it? It‘s not an immersive experience.
But what if it is? Are there moments where people live in an immersive experience that feels real but isn‘t? Can AI be incorporated there?
There‘s a strong winner in this sense — gaming. If you‘re a gamer, then you know exactly what I mean. The gaming industry has been thriving to become more immersive and have an adaptive experience.
In a nutshell, if you’ve been playing for hours and feeling that you‘re inside the Sci-fi world of a game, then someone‘s doing a good job.
Metaversical AI World
The more I write this word, the more it doesn‘t make sense. The core concept of the metaverse has AI incorporated in it. But I already wrote most of this article, and it sounds a bit sophisticated, so I‘m keeping it (go Metaversical!)
Remember when the metaverse started trending in 2022? Right after Facebook rebranded into Meta? At that time, all news outlets asked big companies the same question — “What are you doing for the metaverse?“
Microsoft wasn‘t changing their name or anything. But they started talking with a huge gaming company, Activision. They just wrapped up the $68 billion deal, the biggest in their history.
The truth is, it doesn‘t matter whether the metaverse is hype or here for the long run. There‘s one thing that will keep on growing in both cases — gaming.
The idea of a metaverse opens up the doors to a whole new level of gaming. If a company dominates this in advance, that‘s a crazy strategical move.
I‘ve written about this before, but I have a strong belief that there‘s an upcoming hype in 2024 that you should look out for — VR.
VR comes and goes. But the world‘s largest company, Apple, never committed to working on a big-scale project in the VR world. That was before they introduced the Apple Vision Pro.
If people start adopting those headsets because they‘re hardcore Apple fans, which will probably happen, then a VR hype has been created.
The moment that happens, it‘s not only about the Apple product. Everyone will get a piece of the cake. Oculus, Meta‘s VR headsets, will spike in sales. Gaming companies will start developing new VR experiences to integrate with those headsets.
Gamers will want to try out this new “experience.“ After all, gaming as an industry is a growing one.
When that happens, Microsoft and its smart acquisitions will be there for them. They‘ve already drawn a picture of the future. One where Microsoft is in each and every part of the cycle. So let’s sit and watch how this unfolds.
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