Microsoft Reels in a Jellyfish

Implications: •Microsoft's acquisition of Jelllyfish.com provides immediately credibility to the social shopping market. •Microsoft acquired Jellyfish.com for both offensive and defensive reasons. •Microsoft recognizes that today's product set might not always meet the needs of tomorrow's users and the acquisition provides additional technology to broaden its technology portfolio and diversify its offerings.

Analysis: While Microsoft may not have a reputation as a cutting-edge technology innovator, it is astute enough to recognize market trends and ensure that it grabs a piece of the pie.  Once it decides that it likes the pie, it frequently harnesses its vast resources and moves to establish itself as a major player.  For example, while it initially seemed to ignore the impact of the web, once it started to take it seriously Microsoft moved aggressively to establish Internet Explorer as the market leader and displaced the now almost forgotten Netscape for market dominance.

Even thought Microsoft's Windows operating system and its Office product suite are the runaway leaders in the PC world, Microsoft is hedging its bets with new offerings such as Microsoft Office Live Workspace which will help it defend its position against open source offerings as well as offerings from competitors like IBM. Other examples include Microsoft's entry into the on-demand or software as a service market.

The acquisition of Jellyfish.com serves to establish Microsoft in the web shopping market and provides not only a social marketplace with a wide range of technologies including search functionality, chat capabilities, consumer provided product evaluations, and price comparisons, it also encourages consumer participation by allowing them to share in the royalties that are generated when they make a purchase. It also includes an innovative auction capability in which prices are reduced as the auction nears completion. The Jellyfish acquisition as both offensive and defensive characteristics. On the offensive side it provides Microsoft with a beachhead from which it can expand its web shopping capabilities; from a defensive perspective it serves to help it further compete with Google in the online advertising space.

Whether the primary motive was offensive or defensive, one thing is certain - Microsoft is taking this market seriously and be taking it seriously, Microsoft is further enhancing the social networking shopping market's credibility while continuing to evolve and augment its own capabilities.