Software giant to acquire mobile music service provider Musiwave to boost its consumer mobile offerings…
“The Zune maker intends to buy the French company Musiwave SA, a provider of mobile music entertainment services to operators and media companies…”
Microsoft Corp. on Monday announced its intention to buy France-based mobile music services provider “Musiwave SA,” in a move that could dramatically boost the software giant's presence in the cell phone music space.
“The software giant signed a deal with Musiwave’s parent firm, Openwave Systems, which give it exclusive rights to negotiation an agreement to purchase the subsidiary.”
The acquisition will be just another brick for the foundation of the “Connected Entertainment” concept. Under this concept Microsoft is promoting various hardware and software assets such as Windows Mobile, Zune, MSN and Windows Live.
“Musiwave would bring key assets to us as we continue to bring our vision of Connected Entertainment to life,” Microsoft’s music chief J Allard said in a statement.
The companies did not disclose any financial details of their discussions. Microsoft would acquire Musiwave from Openwave, which bought the company in 2005 for more than $121 million. At the time, Openwave said it expected Musiwave would add more than $50 million to its revenue for the calendar year 2006.
The acquisition will give Microsoft exclusive use of Musiwave’s technology, which allows mobile operators to provide self-branded music applications, including full song-over-the-air downloads, ring-tones and ring-back tones. Operators including O2, Vodafone, T-Mobile, Orange, Telus, Telefonica and Virgin Mobile are among Musiwave’s customers.
“Microsoft and Musiwave share the same philosophy in working with hardware and mobile operator partners to deliver great experiences for mobile device users,” said Pieter Knook, senior VP of Mobile Communications Business at Microsoft, in a statement.
“Bringing Musiwave on board would provide an opportunity for Microsoft to explore new areas in the mobile space previously untapped, and to showcase the power of software plus services,” he said.
The potential purchase also “reflects Microsoft’s recognition of the software and technology expertise in Europe,” Knook added.
In its announcement about the deal, Microsoft touted Musiwave’s support of phones from different manufacturers running a variety of software, indicating that the software company could decide to continue supporting non-Windows Mobile phones with Musiwave services.
With Musiwave, Microsoft would compete with other mobile music services, most notably Apple Inc.’s iPhone combined with iTunes. “They are probably looking at the success of the iPhone and are concerned that it could build into something,” said Matt Rosoff, an analyst at Directions on Microsoft. “If the iPhone does not cut into Windows Mobile sales, it could stall growth.”
In addition to the iPhone, other mobile phone makers have music services. Nokia Corp. recently opened a mobile music store available to customers in the U.K. Samsung also introduced a mobile music store with MusicNet, a company providing white label music services.
Musiwave is responsible for a variety of products and services such as MODS (Music On Demand Service) a solution based upon Musiwave’s Music Player, SDC’s Java DRM solution, and Coding Technology’s AAC+ optimised audio codec. The service works on Symbian devices such as Siemens SX1, Nokia 3650, 3660, N-Gage and other Series 60 handsets.
Already Microsoft mobile technology runs on a variety of mobile platforms, featured on more than 140 mobile phones made by 50 handset-makers, sold by more than 160 mobile operators around the world.
In fact mobile music storefronts are emerging as one of the most important new channels for fans to discover, purchase, and enjoy full-track music and related content. Some analysts also predicted that soon music-capable mobile phones will surpass stand-alone MP3 players in terms of popularity
Going to market with a company like Musiwave supports Microsoft’s mobile strategy because Musiwave allows operators to offer self-branded services. Microsoft has typically partnered with operators and handset makers, rather than trying to offer services that could compete with them, Rosoff said.
Buying a mobile music company is clearly a departure from Microsoft’s typical business user-focused strategy with Windows Mobile, however. But as far back as two years ago the company signaled its intention of trying to appeal more to the consumer market, when it moved the Windows Mobile group into the larger consumer-focused group at Microsoft that includes Xbox and Zune, Rosoff noted.
The move is a reminder that Microsoft is “very serious” about becoming a player in the portable music space “and continues to invest heavily in it,” Enderle Group Principal Analyst Rob Enderle, said in a statement.
The fact that Musiwave is based in Paris and has many European customers is not a coincidence. Microsoft may also be trying to attack Apple at some of its weak points -- including the fact that it does not offer a subscription service and the fact that the market is moving toward cell phone as the preferred device for portable music over MP3 players.
“France is where Apple is weakest as that market tends to favor platforms like Microsoft’s which allow for multiple payers, and they do not like to see a lock-in between the service and the hardware,” Enderle added.
With 1 billion music-capable mobile phones to be sold until 2010, the mobile music market is a potential gold mine for every company involved in the market. Every major carrier and mobile phone maker is involved in selling music or ring-tones to its customers.
Paris-based Musiwave is a unit of broadband services vendor OpenWave. Microsoft said Musiwave would continue to operate from Paris if the deal is closed. Financial terms of the offer were not disclosed.
Microsoft in 2007 has been busy on the acquisition front. Deals to date include agreements to buy hospital software provider GCS, digital ad network AdECN, mobile advertising company Screen Tonic, and automated voice services vendor Tellme Networks.
Microsoft also recently paid $240 Million for a 1.6% stake in social networking site Facebook.