OfStartups

Category: Business

  • The $69 Bn Microsoft Activision Acquisition

    Microsoft acquired Activision Blizzard at $69 billion. This is the largest deal in the tech world. Why did Microsoft acquire Activision?

    Microsoft acquires Activision Blizzard at $69 billion whose games would be introduced to Xbox

    Gaming market scenario

    The gaming market in which Microsoft competes is the gaming consoles.

    Here it has a tough fight with Sony. Microsoft’s Xbox competes with Sony’s Playstation. But if we see the gaming consoles market landscape for the United States, Sony is a clear winner. Sony beats Microsoft with a huge edge with its market share going to a peak of 87% in 2022 as opposed to 12% of Microsoft. The lifetime sales of PlayStation’s latest PS5 which was released in 2020 is 32 million units. It is around 20 million units for the Xbox Series X and S. In the lifetime sales, this number is more intensely seen. In the EU, it is 80% Sony and 20% Microsoft. Globally, Sony has a 70% market share as opposed to the 30% of Microsoft.

    Gaming console market shareSonyMicrosoft
    US87%12%
    EU80%20%
    Global70%30%
    Market shares of Microsoft and Sony in Gaming Consoles

    With the addition of Activision, Microsoft aims to widen its gaming offerings. Activision is the owner of popular games like Call of Duty and Candy Crush Saga. Microsoft would make avail these hit games on Xbox.

    The Future of Gaming: Cloud

    One of the reasons for PlayStation being a market leader is Sony’s expertise in hardware. On the other hand, software is the forte for Microsoft. Operating systems and productivity software being the flagship Microsoft products, it has unparalleled expertise and talent in building software.

    This is exactly where Microsft is betting on and by far has succeeded. Like the trend for many, gaming experiences are now being introduced on the cloud.

    Microsoft has pioneered this domain of cloud gaming. This is like Netflix for gaming, where the subscribers have to pay a monthly subscription to play. And the best part is, it can be hardware agnostic. It can be played on gaming consoles, computers, or on smartphones. Cloud gaming is a very flexible option for customers as well, with huge prices not paid at first.

    If we look at how Microsoft has progressed in cloud gaming, it had around 20-30% market share in 2021. But by the end of 2022, this market share rose to 60-70%. Large companies like Google shut down their gaming services after this.

    Cloud gaming market shareMicrosoftSonyNvidiaGoogle
    202120-30%30-40%20-30%5-10%
    202260-70%10-20%10-20%0-5%
    Microsoft leads in the cloud gaming market

    Conclusion

    Clearly, with the acquisition of Activision, Microsoft aims to diversify its gaming portfolio in terms of the varieties of games on Xbox and, especially, on cloud gaming. This acquisition also opens up a new horizon of mobile gaming which it was not on before.

  • What is ARM? – The largest IPO 2023 debutant company

    What is ARM? What exactly it does do? Not a well-known name, but how it is a super important player in the semiconductor chip supply chain?

    Arm became the largest IPO of 2023

    ARM (prev. Advanced RISC Machine)

    Arm designs architecture for CPUs. These designs are then used by chip makers like TSMC, and Samsung, as well as chip designers like Apple, Nvidia, and Intel. As Arm’s CEO Rene Haas says – “We don’t build chips but license the brains to someone else who will”. Essentially, it provides intellectual property.

    How does it earn?

    Arm has two revenue sources – licenses and royalties. A company that wants to design its products based on the Arm’s architecture has to pay an initial cost for licensing. If the designed product has to be productized to sell to the end customers, Arm charges them royalties per product sold.

    How significant is Arm in the semiconductor chip supply chain?

    99% of the total smartphones sold have Arm-based processors. So pretty much each of the phones that we see around us is powered by Arm. With more than 250 billion chips sold, the company highlights that 70% of the world’s population are using Arm-based devices. So imagine phones, laptops, gaming consoles, and consumer electronics devices that we see around, and fairly assume they are using Arm. It has emerged as a leader in the emerging market of IoT where Arm powers 90% of IoT chips.

    Arm is unarguably one of the most important tech companies in today’s world.

  • Customer delight

    What is customer delight? And how is it different from customer satisfaction?

    Customer Delight

    A good publicity for the product occurs when you bring a smile on a customer’s face. Customer delight happens when you provide something more to the customer apart from the basic proposition of your solution.

    It is not the same as customer satisfaction

    Customer satisfaction is when you deliver what you promised the customer and meet their expectations. Customer delights when you deliver what you promise and provide extra value to them. In short, you exceed customer expectations in this case and make a lasting positive impression. 

    Some good ways to delight customers can be quick and exceptional support, acting upon the customer queries quickly, etc. To under-promise and then over-deliver.

    Why is customer delight important?

    Because it eventually strengthens the brand. 

    1. Increased loyalty
    2. Positive reviews and publicity
    3. Increased lifetime value of customer

    Conclusion

    Making a lasting impression is what will make you stand apart from your competitors, no matter how big and strong the competitor is. In the end, people buy products from people. Thus keeping this aspect, and building a very people-centric experience, and exceeding their expectation will always help in the longer term.

  • Twitter vs Threads

    Meta’s Threads became the fastest-growing app of all time. It acquired 100 million users in the first five days of its launch. To compare, its competitor Twitter took five years to reach the same number.

    Social media is a zero-sum game. All the players compete for the limited attention span of the users. Going to the top always comes at the cost of other competitors’ users’ time. Moreover, they are not only essentially competing with other social media for the users’ time span, but for other media like television, OTTs, etc. Everyone is in the race to grab the users’ time.

    Let’s see what are the strengths of both Meta and Twitter.

    Meta has a huge existing user base in Instagram of 2.3B users globally. Threads users do not have to start their content journey from scratch, as they have already following people. Starting from zero is always a difficult job to do.

    Twitter’s biggest strength is the limited but quality users which they have. They have influential figures actively using the platform. Politicians, entrepreneurs, sportsmen, journalists, notably. It has a good reputation of a relatively better source of truth for all the happenings around than other platforms.

    To stay in the game, both Threads and Twitter have to build stronger moats around their existing strengths. This is now a game of successful execution.

    Threads is not the first text-based social media platform. Facebook was not the first social networking site. Google was not the first search engine.

    Long story short – in the tech industry there were always similar products launched prior to the established players. But a common pattern is that there has been only One strong product remaining in a segment, which has dominated the space unequally. It has been a kind of winner-takes-all situation.

    It will be interesting to see how this text-based social media segment shapes up ahead.