Microsoft Intends to Acquire Musiwave
Acquisition of Musiwave would build on Microsoft's commitment to deliver Connected Entertainment vision to consumers. — Microsoft Corp. today announced it has entered into an exclusivity agreement around its intention to acquire Musiwave SA …
Context & Ripple Effects
The Musiwave intent-to-acquire is the second European capability buy Microsoft has announced this year, following the May 2007 purchase of mobile advertising firm ScreenTonic — a pairing that puts ads and music, the two revenue engines of the mobile content business, under one roof. Both deals feed the Connected Entertainment strategy Microsoft has been building out all autumn.
The timing is pointed: it lands alongside the Zune hardware refresh, with new players reaching consumers tomorrow and the artist-customization push of Zune Originals giving the device line its first real identity. It also extends the music-distribution questions Microsoft raised in August, when reporting suggested a deal structure that might lead to free but "watermarked" downloads.
First-order effects
- Musiwave's carrier relationships for licensed mobile music move to Microsoft, giving the Zune and Connected Entertainment push an existing operator distribution channel rather than one built from scratch.
- Musiwave's operator customers now have a Redmond-owned supplier, tying their music storefronts directly to Microsoft's platform decisions.
Second-order effects
- Rival mobile music aggregators face a competitor with Windows' balance sheet behind it, pressuring consolidation among the remaining independent suppliers to carriers.
- Carriers choosing music platforms must weigh whether staying with a Microsoft-owned Musiwave deepens dependence on the same company selling them ads through ScreenTonic — bundling leverage Microsoft did not previously hold.
Third-order effects
- The ScreenTonic-plus-Musiwave sequence shows Microsoft assembling a mobile consumer stack acquisition by acquisition — media, advertising, and delivery bought separately and stitched into Connected Entertainment — a template that, if it holds, makes further tuck-ins along the mobile stack likely.
- For the recorded-music business, every platform owner buying its own licensed-delivery pipe shifts bargaining power away from standalone download stores toward whoever controls the handset-to-carrier relationship.
The trend: Microsoft's 2007 spending pattern — ScreenTonic for mobile ads in May, Musiwave for mobile music now — marks a deliberate shift from building consumer services organically to acquiring the pieces of a Connected Entertainment stack.