Ask YC: Why hasn't Microsoft acquired Xobni already?

https://news.ycombinator.com/item?id=118691

by mercurio • 18 years ago

14 26 18 years ago

news.ycombinator.com

Xobni is such a good fit for Microsoft that its puzzling that they haven't been acquired already. Any theories why this hasn't happened yet?

p.s. please remember the intent of this thread is analysis and not gossip.

ctingom• 18 years ago

Microsoft doesn't want to admit that they had the inbox backwards all along. ;-)

nextmoveone3• 18 years ago

My guess is because Xobni doesn't have widespread adoption(1 mil + users), which I'm sure is on it's way..

wallflower• 18 years ago

Xobni is holding out for the possibility of lucrative corporate site-wide licenses (negating the need to be acquired by Microsoft).

mercurio3• 18 years ago

So I thought about this for a while and here's what I came up with:

Scenario a) Microsoft wants to acquire Xobni, but Xobni does not want to be acquired at its present valuation (whatever Microsoft was offering). However Microsoft also has strong leverage over Xobni as it controls what components work with Outlook. So this scenario of an aggressive Microsoft being rebuffed by a confident startup does not sound plausible.

Scenario b) Microsoft is timing its acquisition. If Xobni is independent, it could possibly integrate its service with other webmail providers. These providers (like Google or AOL) would be very reluctant to let a Microsoft owned Xobni have access to their users. In this case, by delaying the acquisition Microsoft could be hoping to gain leverage over the other email companies once their users are hooked on Xobni. Something along these lines seems much more plausible to me.

A third scenario comes to mind: Microsoft realizes that its history of acquisitions has not been too great, and it thinks Xobni is too important to risk screwing up this way. This seems unlikely just based on everything I've read and heard about the company and its culture.

ALee• 18 years ago

Well (A) is more likely because Xobni is part of the microsoft accelerator program already which I'm sure turns off google and AOL.

They're well-funded, so the asking price must be high.

mercurio3• 18 years ago

They are well-funded, but they cannot achieve much without Microsoft (because Microsoft controls access to Outlook). So Microsoft has huge leverage in this situation. This makes me believe that Microsoft is in charge of the timetable (whatever it maybe). And yes being part of the Microsoft accelerator would I guess raise suspicions in the valley.

marketer• 18 years ago

The primary reason Microsoft acquires companies is either to enter a new market, or greatly strengthen its position in a market. For instance, Microsoft acquired bungee to grow it's xbox platform, and more recently FAST, which is to enter the enterprise search space. Microsoft is already firmly embedded in the corporate e-mail business (outlook), as well as the online e-mail (live mail/hotmail), so buying xobni doesn't make sense.

rms• 18 years ago

God forbid they try and improve one of their products...

wavesplash• 18 years ago

Being a better feature has nothing to do with being a lucrative acquisition. If Xobni can show a clear benefit in $$'s to M$'s bottom line, then the corpdev guys might get excited. Right now there's no serious competitive threat to Outlook as installed software, so buying Xobni (or anyone else) just for additional features isn't interesting. Without a competitive threat MS could take 2 years to copy most of Xobni and roll it out in a future version.

mattmaroon• 18 years ago

They bought Lookout with the ostensible purpose of improving Outlook.

I'd guess MS is waiting to see what sort of traction Xobni gets, and if it's solid they'll consider acquiring and/or implementing some of that functionality into Outlook.

lanej0• 18 years ago

Because Microsoft prefers to copy/release a crappier version of things in house.

I'm just saying!

mercurio3• 18 years ago

OK I thought of a better reason for Microsoft to keep Xobni independent. This way a business has to pay for both Outlook and Xobni!

If Xobni was rolled into Outlook, then Microsoft could only charge for Outlook (possibly force an upgrade to a new version). If Xobni was an independent (though Microsoft controlled) entity, every enterprise Xobni user would willingly pay for Xobni and have to still pay for Outlook. Further depending on the utility of Xobni to users, they could charge more than Outlook itself! So maybe Microsoft sees the potential to double its enterprise email revenue and is being patient.

readit• 18 years ago

Why buy the cow when you get the milk for free?

prakash• 18 years ago

I guess there are 2 sides to it.

From Xobni's perspective: 1. What is the long term roadmap for Xobni? 2. Will merging with MSFT slow down innovation?

and the most important question

3. What is the right acquisition price for Xobni?

       Xobni roughly raised 4.25 million Series A. At that time they probably had a decent prototype to demo at Khosla ventures -- which means that (pure speculation) 20-35% of the company is owned by the VC's. Ideally the VC's would like to make roughly 3-10X of their investment, which means 15 to 45 million.

       From Adam and Matt's perspective, they have a winner on their hands, and they would want to maximize their ROI on selling Xobni and make sure they never have to work again:-). The longer they wait, the more users they get. And, clearly their pace of innovation is going to be faster than msft.

From MSFT's perspective: 1. Does Xobni have enough users? 2. How frequently do people use Xobni? 3. Can Xobni scale with large mailboxes? 4. Should MSFT buy it or build something similar?

[From using Xobni for a few months, I can say that it's a kick ass product]

my 2 cents.

indy• 18 years ago

[off topic] Could you please not use the 'code' tag in the above quote? thanks

RyanGWU82• 18 years ago

This is silly. There are hundreds of third-party add-ins for Microsoft Office. There are 677 listed in the Office Marketplace [1], including 20 "inbox management" applications.

Microsoft encourages third-party developers to write add-ins for Office. That doesn't mean they have any interest in acquiring (or copying) all of those add-ins.

[1] http://office.microsoft.com/en-us/marketplace/FX100621221033...

electric• 18 years ago

This is the power of PR.

JaySearson• 18 years ago

Microsoft doesn't want to acquire Xobni because Xobni already works for Microsoft. If Xobni is independent, microsoft benefits, and Xobni takes all the risk and deals with all the cost. Besides, Xobni is developing in an area (desktop office applications) that microsoft has tidily wrapped up.

Microsoft is interested in acquiring companies in markets they don't have wrapped up-- like the internet. Xobni makes outlook better? Great. Except that it's not about Outlook. It's about Gmail.

gscott2• 18 years ago

The solution to that would be make a version for Gmail.

That would piss MS off, they might buy them just to kill the Gmail version.

ntoshev• 18 years ago

If it is really successful on Gmail, Google would make their own version, and Microsoft would know that.

fiaz• 18 years ago

Good point. I admire what Jobs has done with OSX in making it easy for developers to create first class software. Perhaps Xobni is exemplary of this model for Microsoft. An acquisition of Xobni might not benefit Microsoft as much as seeing Xobni flourish independently and be an example of grassroots development that is so prevalent in the OSX community.

If Microsoft has realized that they have cannibalized a large segment of developers (think plankton in an ecosystem analogy) then they might realize that it's better to have more diversity and encourage independent developers to create quality software such as Xobni.

motoko• 18 years ago

This comment is INDEPENDENT of my personal feelings about Xobni the product and the Xobni the team:

Outside of a small core community, Xobni news just isn't that relevant. Please save the Xobni posts for actual Xobni news.

DarrenStuart• 18 years ago

As someone else mentioned once it has a lot of users and is a mature product then they might be interested.

I don't agree with the people saying that they wouldn' because they own the market place. This is not true and xobni would be a nice fit with enterprize customers and MS could try and buy them to attract new customers or a value add for existing customers.

I think if they never buy them its because MS having angling Office as a platform for years and a company like this demostrates that it is possible to make money from that platform.

I spent a long old time developing on top of office making business apps and its not a bad platform if you take it for what it is.

Ask YC: Why hasn't Microsoft acquired Xobni already?

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