A shopping list Suggestion for Microsoft - SoundCloud

Here we are suggesting few companies which Microsoft consider buying. The selection of these companies are purely based on our assumptions and knowledge.

Considerations

We didn't consider companies which have more than few billion valuations. We believe Small acquisitions are easy to digest. But many of  micro acquisitions will become acquire  when the product doesn't have much value.  But we consider a little more big companies(Not All) to get better value out of this.



1) SoundCloud -  Suggestion for Microsoft Windows and Devices team

 

SoundCloud is the YouTube for Audio. A social network for Music aspirants. But SoundCloud is not a financially successful company. They don't make much revenue even though they  have 175 million users.That is a huge number!!. Sound Cloud launched a premium  subscription feature SoundCloud Go few months back, but it is not successful yet. So their business model is different. Also they don't have contracts with many original music creators.

Things are exactly opposite for Microsoft's Groove Music service. They have 40 million tracks in their list. But not popular yet. They struggles between Spotify and Apple Music. Microsoft can Simply add this music portfolio to SoundCloud Go and can makes it successful.  Also SoundCloud is a social network for music aspirants that brings much ad revenue potentials.

Spotify tried to acquire SoundCloud few months ago for 1 billion(as per reports), but abandoned the move as they are preparing for IPO. Later there were rumors that Google bid SoundCloud for 500 million. Since SoundCloud's financials are not very good it is likely that the deal can materialize. So if Microsoft wanna purchase it have to spent lil more than 500 million dollars.  ie $3 for a user.. Not a big deal. Microsoft get that much revenue by simply adopting a wise advertisement model. Also Microsoft can control the operating expenses because

1) They already spends music contracts money for Groove

2) They have lot of space in Microsoft Azure Data centers 

Challenges

- Unifying the SoundCloud accounts with Microsoft Consumer accounts is not easy. Skype took years for same.

- Microsoft's ad technology is not very advanced. They currently use display ad technology of AOL and others .Also MS doesn't have a Audio as technology too. So it may become difficult to monetize the 175 million users.