People are talking about a rumour that Microsoft has made an offer on Linden Lab.
Funny as that might seem on the face of it, a small number of Linden Lab staff are today spreading the story that Linden Lab is now entertaining offers for sale, and that Microsoft has actually presented one.
For Microsoft’s part, I doubt that it could care less about Linden Lab, but might be willing to make an offer to stop certain competitors making that purchase.
As yet, there isn’t any confirmation from Linden Lab as to whether the information being given by its staff is correct.
Update: Linden Lab responded to my query, and has declined to proffer any confirmation or denial.
A followup is here.
Another update: Two Labbers say that there was an offer – which was rejected – but that they don’t believe it to have been from Microsoft.
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So what do you think this means, Tateru? A few possibilities off the top of my head:
1. Rumors meant to boost morale / public opinion about the company.
2. Philip saw how much of a mess M left the company, and didn’t think it was worth it? (Not sure that’s likely.)
3. Investors just tired after 10 years, nervous, and looking to cash out?
4. The XBox team said, “Well, I suppose Sony Home isn’t going away, even if it’s lame and mismanaged. Let’s go get our own.”
5. Microsoft hasn’t been in the VW game, and right now LL’s valuation is about as cheap as it’s going to get, and so they made a low offer?
Makes sense on Linden Lab’s end. I believe you yourself projected just a few reasons the layoffs occurred, and one was getting ‘slim’ for acquisition.
It doesn’t make a whole lot of sense on Microsoft’s end though. Especially in a year where it’s had 0 acquisitions thus far. It seems kind of weird they’d open the purse strings for a company so completely unrelated to and devoid of their products and services. How would Microsoft benefit from owning a virtual world? I can’t think of a single long term strategy of Microsoft’s that’d benefit from Second Life.
That being said, I’d love if Microsoft got its hands on it. Talk about new life for Second Life.
The only way I could see this making strategic sense for Microsoft is if they wanted to buy-and-bury it. It doesn’t seem to fit with their tactical or strategic goals, except insofar as it would deny anyone else the property.
@Hiro: Yes, the whole shed-everything-outside-of-the-USA looks like a readiness-for-sale move in retrospect. As for the rest, I want to think about it some more.
I’ve contacted the Lab for comment. Assuming no long delay or stony silence, the result should be interesting.
If this is a real acquisition by a publicly traded company, you should receive stony silence from all formal channels. That’s the way i’m made to understand it has to be under SEC rules.
Past that, I think this actually fits well with microsoft games and taking the infrastructure, especially if the patent portfolio comes with it.
@Hiro
1. It’d take a web behemoth like Microsoft, Google or Amazon to get Second Life to where we all want it to be, so most definitely I believe such an acquisition would return to Linden Lab the kind of hype it had half a decade or so ago before all of the “its still alive?” crap started. I always figured Linden Lab would try and grow into that behemoth itself however…but I guess it hasn’t really grown as a company in some while, due to its userbase not growing.
2. Linden Lab is profitable as far as we know. its business model is sound. There’s been some scary doomsday scenarios that bloggers like Tateru have brought up, such as the “what if” scenarios regarding big landholders leaving, but in general I don’t think Linden Lab loses money without making money with its current business model. I don’t think Philip has reason to be desperate or running scared.
3. And yeah, there’s that, the fact Philip isn’t the only vested interest in those kinds of matters.
4. Sony Home bombed for all intents and purposes. Xbox Avatars makes Microsoft a LOT of money. If you Google “xbox live online sales” or similar, you’ll find Microsoft made over a billion this year off avatar related stuff. They’re also investing in them this Fall to work with Kinect. Highly unlikely Microsoft is looking to swap their Avatar system with some Xbox Live/Second Life merger in an effort to be not-so-similar-to Home. Not to mention that’d fundamentally alter Second Life.
5. That could be it too. Its a slimmer company in terms of employees, its segmented off the adult areas, its shed the teen grid, and it might be a much cheaper and safer purchase than it has been in recent years.
[...] This post was mentioned on Twitter by Tateru Nino, Laura P Thomas, Gavin Dudeney, robin teigland, Katherine Mancuso and others. Katherine Mancuso said: RT @taterunino: Linden Lab entertaining offers http://bit.ly/bxF58n [...]
[...] made a bid for purchase of Linden Lab, with the rumor apparently being spread by Lab employees. Tateru Nino is also writing this up as a [...]
@Ezra:
1. Sounds reasonable.
2. Yeah, after stripping 1/3 of the staff. Funny you should say they have a sound business model, but I might disagree. From earlier this week: http://www.secondtense.com/2010/09/linden-lab-has-no-apparent-business.html
4. I agree with how bad Home flopped, but Sony is still putting money into it and developing it. Now, as for XBox, I hadn’t realized just how profitable the avatars were; that’s astounding if your numbers are correct. As for Kinect, I almost forgot about it, because I’ve pretty much written it off. http://www.secondtense.com/2009/11/project-natal-forget-gaming-its-virtual.html — though, hm. Maybe they came around to my way of seeing it. I think Kinect nee Natal could be made into a really compelling virtual world tool. Combining it with Second Life might be a really cool use.
Microsoft has been playing around with OpenSim for the past year over at ReactionGrid (and, most recently with the Unity-Jibe platform as well) and they might have decided that they see the future of the 3D Web coming, and want to get in ahead of it.
Imagine if Microsoft had bought AOL before Netscape came out and if they had the vision to take the AOL platform — ad delivery network, search, IM, forums, the browser, and use it as a front end to the rest of the Internet?
People were actually paying AOL for all this stuff. It could have become a commercially viable delivery platform for all of Microsoft content, and maybe they wouldn’t have been passed by Yahoo, Google and Facebook. After all, a lot of what Facebook has, AOL had in nascent form 15 years ago.
Maybe Microsoft wants to get ahead of the technology curve for once, instead of following along far behind. The only way it was able to dominate the browser market was by shipping it with every copy of Windows. But for the rest of the Web innovation, Microsoft had no hardware advantage, and suffered every step of the way. It lost the online apps race. It lost the search engine race. It lost the portal race. It lost the e-commerce race. Now it’s also losing the mobile race.
Maybe the company learned from its mistakes.
Or maybe, if they buy Second Life, they will treat it as just what it is – a social virtual world, bundle it with their other offerings, and totally miss the opportunity.
Or – and this is really visionary — they will take some of the expertise in SL, combine that with their UI and 3D technology, and come out with a 3D operating system-virtual world browser combo and beat Apple to the punch.
Nah, that’ll never happen.
– Maria
Just curious – what makes so many people believe that Linden Lab is profitable? or that it ever was? According to Catherine Smith, their Marketing Director at that time, it wasn’t profitable even in March (and since that things went much worse as we know). Read this interview http://news.cnet.com/2100-1043_3-6054598.html notice
” For now, the company isn’t profitable, and it’s not clear when it will be, said Catherine Smith, Linden Lab’s director of marketing. However, she told CNET News.com that Linden Lab plans to use its new funding for aggressive international expansion, as well as for hiring intended to boost its infrastructure.”
I think Jeremy touched on something in regards to patents. Microsoft, or other corporations, may have an interest in what LL owns, not its product.
Buying LL just to shut it down? Microsoft needs to show themselves that the money they’d make selling the physical assets or similar actions is still more than the debt they would be buying with LL. I’ve not seen anywhere that puts LL in the black just yet.
Unfortunately, if this rumor is true, and if MS does buy, my guess is they will act like lemmings and follow the other VW’s off the cliff and demand that everything in Second Life be PG.
@Maria
The 3D web? Microsoft is split across two avenues when it comes to that: Silverlight and WebGL. The former of which with no real 3D capabilities right now in that it can’t run send instructions directly to the GPU with shader languages, and the latter is a spec IE9 isn’t going to support. If Microsoft is planning to pursue something ambitious like turning IE10 into a WebGL compliant browser that uses secondlife:// as a connectable protocol that renders 3D graphics in the browser, that’d make sense I suppose, but that’d be more about seeing a future in WebGL than anything else.
As for any technical advantages to buying Linden Lab, when you take Second Life out of its silo, there is absolutely nothing about it technically advanced or ahead of what Microsoft is doing and has long since done.
For example, Second Life’s server-infrastructure is just a bunch of Intel servers running one sim per core backed with MySQL databases if highscalability.com is to be believed. What could Microsoft benefit from that? It doesn’t demonstrate anything greater than Windows Azure, or even a client product like Eve Online which is backed by Windows HTC and SQL Server tech to power a similar amount of concurrent users in a single ‘server’.
It’s in above areas like that Second Life itself stands to benefit; if the sims could become cloud hosted and land owners priced more akin to what you’d expect from, essentially, web hosting providers nowadays. Not to mention Microsoft is next to none albeit probably not preferably to the Mono team itself in getting the Mono implementation up to shape and improving scripting in world.
Without Microsoft though, there’s nothing Second Life is ‘ahead’ in really unless one assumes it never needs to be in the browser, and that in the browser WebGL, Flash and Silverlight aren’t going to be the three major embedded clients. With Microsoft though, the idea of 3D in the browser via a proprietary product like Silverlight or a HTML5 spec like WebGL seems viable, provided Microsoft sees a future in 3D in a browser for some reason.
what’s the real gossip….You know support staff?We’re all dying to know who’s replacing the ontynes, when the ontynes are gone, will we ever see lindens on support again and if support hours will be back to their usual!
Microsoft? They’d go for open sim or a pretty like Blue Mars
@White Linden Lab certainly was profitable. Indeed, hugely profitable apparently. Quite when that profitability started to slide into the red is debatable. Sometime in the latter part of 2009, I should think. Given all the cuts and so forth, it wouldn’t surprise me if Linden Lab was profitable again as of roughly tomorrow, now that the UK staff are gone.
White Lebed — the CNET story about unprofitability is from 2006. Things changed quite a bit since then. — Maria
The quickest way to sink a possible acquisition is by talking about it.
Perhaps there are folks at LL who don’t WANT to be acquired by u$.
My money was on Google for some years now. I still think the SL grid on the Google worldwide infrastructure would be a killer.
Way back in April I blogged (http://poultryreport.blogspot.com/2010/04/why-google-needs-to-buy-linden-lab.html) about why I thought Google should buy The Lab and still believe the “Do No Evil” crowd should do it. With Skype’s inevitable tie-in to Facebook, Twitter’s leap past MySpace in volume, and other social media shifts, adding SL could help Google’s heretofore failed attempts to enter the market. Imagine a Second Life channel on GoogleTV? I can see it.
Google would make more sense than Microsoft in a lot of ways, in other ways not so much. There’s been the shortlived Google Lively, and the Chrome experiments with the O3D plugin. Now they’re behind the WebGL spec, but still may be eyeing the idea of a virtual world web.
There’s also been rumors all year of ‘Google Games’, but that’s mostly been rooted in their investment into Zynga recently. But, Google’s made some other related interesting acquisitions and investments, they bought the company that owns SocialGold which allows for cross-world virtual currency.
Many other things to consider, like Second Life’s adoption of Google Appliance for search, their webmap API, all things that hint at a billing relationship already at least.
Who knows, I just hope the rumor is true in any capacity because Linden Lab seems like it could use a big infusion of morale and cash.
The potential benefits to Google from a purchase such as SL are a good reason that Microsoft might be interested, I would think. As mentioned by others, it would potentially be a strategic move, to keep the competition, Google, from getting hold of it.