Amid Yahoo! rumours MS buys mobile music firm

19 Nov 2007

As rumours continue to proliferate around the likelihood of Microsoft buying search portal Yahoo!, it has emerged that the Redmond-based software giant has acquired a mobile music service provider called Musiwave for US$46m.

Microsoft has acquired Musiwave from its parent Openwave, which acquired Musiwave in January 2006 for US$117m. Microsoft will also assume US$4m of net debt.

Openwave currently employs 100 people in Belfast at the former Apion operation, which it acquired in 1999.

Musiwave builds and hosts white-label mobile music service for mobile operators such as T-Mobile and Orange.

The Musiwave deal will allow Microsoft to bolster its mobile entertainment proposition, alongside its PlayReady mobile DRM (digital rights management) technology.

In many ways it could be the first signs of Microsoft’s response to the Google Open Alliance – codenamed Android – to create applications for a new mobile phone operating system.

Now that it has various mobile technologies in its stable from an operating system to instant messaging, email, games and mobile search, Microsoft should be able to deepen its relationship with many of the world’s largest mobile operators.

“The Musiwave acquisition also dovetails very nicely with Microsoft’s existing entertainment portfolio,” explained Ovum analyst Jonathan Arber. “It can now offer music across the broadband and mobile space, and we would not be surprised to see a mobile version of the Zune music store.

“At the very least, this brings it closer to its stated aim of making it easy to transfer content between digital devices in the home. Now that it has a solid mobile platform, it can continue to drive integration between fixed and mobile music services, this time from the mobile platform side,” Arber said.

Meanwhile, all eyes are on Microsoft for other reasons than just the Musiwave acquisition.

The net is buzzing with speculation that Microsoft is about to pounce with an outright acquisition of search giant Yahoo!, which would instantly give Microsoft an estimated 30pc share of the internet search market.

The rumours certainly aren’t doing Yahoo! any harm. The company’s shares closed Friday up 6pc trading at US$26.82.

By John Kennedy