Last Updated on October 13, 2025 by Dave Farquhar
On May 10, 2011, Microsoft surprised a lot of people by buying Skype for $8.5 billion. The deal closed October 13, 2011. I think most people thought Facebook would do it. Now I keep hearing pundits say that this will fail, because Microsoft buyouts always fail.
Thing is, I can think of 11 Microsoft buyouts that worked out really well. Over the years, I think Microsoft has proven itself to be pretty adept at both cloning products and buying products. They don’t always improve them all that much, but they frequently remain popular.
Sometimes I think Microsoft is better at buying products than developing them. After you see this list, you might agree.
MS-DOS: The first Microsoft buyout
MS-DOS started out as 86-DOS, a product from Seattle Computer Products. Microsoft bought 86-DOS from SCP for $50,000, licensed it to IBM, and then offered to do the same for anyone else who wanted it. This little technicality made cloning the IBM PC much easier, since anyone could buy the same operating system. In a few short years, MS-DOS was the most popular operating system in the world, and it transformed Microsoft, which up to that point was mostly known for its programming languages.
Over the years, Microsoft licensed additional utilities and added them to MS-DOS to bolster the product so as to keep clones like DR DOS at bay.
Powerpoint
Microsoft Office wouldn’t be Microsoft Office without this popular presentation program. Microsoft bought Powerpoint in 1987 for $14 million and it quickly became a raging success. And you thought it was always a Microsoft product.
Microsoft Mail
Originally Microsoft Mail was called Network Courier. Then Microsoft bought it in 1991, renamed it to Microsoft Mail, and it eventually evolved into Microsoft Exchange. I still think Exchange’s popularity at the expense of Lotus Notes has much more to do with the Outlook e-mail client, or Palm Pilots and Blackberry, than it does with Exchange itself, but there’s no denying that Microsoft Exchange was successful.
Foxpro
Although it’s been supplanted by Microsoft Access, Microsoft bought Fox, a clone of the once-popular dBASE, in 1992, and sold them in parallel for 12 years. Foxpro was discontinued in 2004 and some of its functionality rolled into Access. It retains a following to this day, and during its heyday, became more popular than dBASE, the product it cloned.
SQL Server
It might be a stretch to call this a buyout or an acquisition, but SQL Server was originally a joint venture between Microsoft, Sybase and Ashton-Tate. In 1992, the companies went their own directions, but SQL Server continued to carry Sybase copyright messages until 1994. It’s an example of a product that didn’t originate completely within Microsoft, and today it’s one of Microsoft’s most lucrative products.
Visio
Visio was introduced by a company called Shapeware in 1992. Shapeware quickly changed its name to Visio Corporation. Microsoft bought Visio in 2000. It’s a niche product and always has been, but it remains the market leader in its category.
Hotmail
Microsoft tried to re-brand it and failed, several times, and Hotmail has a lot of competition from Yahoo Mail and Gmail, but it’s remained popular since Microsoft bought it in 1997. It may not be what all the cool kids use, but it has 364 million users, while Yahoo Mail has 280 million and Gmail has 191 million. In that respect, it could be the quintessential Microsoft product, couldn’t it?
Frontpage
Microsoft bought Frontpage from Vermeer Technologies Incorporated in 1996. It’s discontinued now, but for several years, it was one of the most popular (and most derided) Web development products. It’s discontinued, but it’s hard to call Frontpage a failure. It was popular in its day. The way web development was done changed, and the world passed it by. Had it remained a Vermeer product, it would have met the same fate.
Mappoint
This product is a conglomeration of technologies Microsoft developed in house and purchased from others, like Vexcel, Vicinity Corporation, and GeoTango.
Encarta
When Compton and Grollier launched successful encyclopedia products on CD-ROM, Microsoft purchased non-exclusive rights to the Funk & Wagnalls Encyclopedia, called it Encarta, and it had a wildly successful 16-year run. Free online encyclopedias like Wikipedia were what finally did Encarta and the entire product category in. As Microsoft knows well, it’s hard to compete with free.
Internet Explorer
Yes, even Internet Explorer is based on an acquisition. In 1995, Microsoft licensed Spyglass Mosaic, modified it some, and called it Internet Explorer 1.0. It wasn’t until version 7 that all the old Spyglass code was expunged. It was a runaway hit, at its peak controlling 95% of the web browser market. Internet Explorer aged poorly, but it did what Microsoft wanted it to do, which was to crush Netscape.
But you can’t really call this one a buyout. Microsoft argued since it gave away Internet Explorer, it shouldn’t owe Spyglass royalties. But it is an example of a quintessential Microsoft product that didn’t originate at Microsoft, and one that Microsoft underpaid for. They just took underpaying to an extreme in this case.
Microsoft losing its mystique
Yes, Microsoft’s share price is relatively stagnant, and Ballmer-era Microsoft resembles the company they displaced, the IBM of the 1980s. I don’t think flubbed acquisitions are the reason for it. When Microsoft was growing, executives would get together on the golf course or other social gatherings, talk about what their companies were doing, and the next time they saw me, they’d ask why the IT department wasn’t implementing whatever Microsoft technology all their buddies’ IT departments were implementing. And usually you couldn’t get by with just implementing one product. You had to implement three, and the other two cost extra.
But what I found was as my career progressed and put me into more situations where I could have those kinds of conversations, I had fewer of them. I was anti-Microsoft long before it was cool. Now most people are more anti-Microsoft than me.
Will Skype be a runaway hit under Microsoft’s ownership, like Powerpoint? Or will it slowly fade away like Frontpage? Who knows. But its failure isn’t a guarantee either.
David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.
I suppose it depends on the meaning of ‘worked’ or ‘not failed’ and from which perspective it ‘worked’ or ‘not failed’. What has been good for Microsoft has not necessarily been good for everybody else. It is what it is, and we cannot know what might have been in some parallel universe where Microsoft didn’t do what they otherwise did.
At a purchase price of 8.5 Billion dollars, Microsoft may never see a nickels worth of profit from Skype before the entire ecosystem evolves out from under, but damage to the competition in the meanwhile will probably satisfy the company in making up the difference, leaving pundits to projections of wishful thinking from dystopian depths of remorse.
Fair enough. I went from the assumption of “worked for Microsoft,” and I’m not used to playing the part of Microsoft apologist. I was an anyone-but-Microsoft guy until about 1997 when it became obvious that my career was going nowhere if I didn’t learn how Windows worked and how to support it. If Quantum Leap were real, it would be so easy to make a couple of minor changes and really improve this industry…
Some people are predicting that Skype will just wither and die under Microsoft, and I don’t really see a lot of precedent for that. I also don’t see it as a guarantee that it will crush Apple and Google either. Microsoft didn’t plan for the day when the PC would no longer be the center of the universe, they were late to that game with half-hearted products, and now they’re having a hard time catching back up. And I’m loving every minute of it because technology is actually interesting again.