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Should Microsoft Buy Netflix?

Posted on | June 8, 2011 | Comments Off

A good article from a Fortune tech blog today on the idea of Microsoft acquiring Netflix.  Here are some excerpts:

On Microsoft not being broken:

The second reason is that Microsoft simply isn’t broken. Its revenue rose 12% in its last fiscal year and its net profit rose 28%. Windows 7 is a vast improvement over previous incarnations of the operating software, just as Windows Phone 7 is a viable competitor in smartphones. The Office suite of software continues to sell well, despite Google’s free apps. And the Xbox and Kinect have made Microsoft a leader in gaming, and a potential leader in digital video.

On whether Microsoft could buy Netflix:

Who could fill this role? Some names have been tossed around, but the best answer may be sitting on Microsoft’s own board. Reed Hastings has shepherded Netflix to a $14 billion market value, defying odds and overcoming obstacles to make Netflix a key player in cloud-based content. Microsoft has $50 billion in cash lying around, so it could buy Netflix and still have plenty enough left to buy Nokia if it wanted.

Why buying Netflix might make sense:

Buying Netflix and installing Hastings as co-CEO would position Microsoft to return to the center of the tech industry. Netflix could speed the Xbox’ transition from a gaming console to a mainstream device connecting TVs to the Internet. Its success in creating a popular, immersive app for tablets could strengthen the appeal of mobile carriers considering Windows Phone 7 as a platform. Microsoft’s investment in Facebook could help Netflix find a strong presence in that social network. And Hastings, who has a deep understanding about the opportunities and obstacles facing cloud-based content, could focus on pushing Microsoft into the future while Ballmer oversees the traditional PC-software businesses.