Swiftkey was Microsoft’s first mobile app purchase in 2016

Previously in this series, we discussed Microsoft’s (MSFT) recently announced its buyout of Xamarin. On February 23, 2016, Microsoft announced the release of a new keyboard for Google’s (GOOG) Android. But this news deserves a mention in particular because not much earlier, on February 2, 2016, Microsoft announced the acquisition of SwiftKey, a keyboard app developer. Although Microsoft did not disclose the financial details of the deal, the Financial Times reported that Microsoft paid $250 million for SwiftKey.
Microsoft’s Other Mobile App Takeover: The Story of SwiftKey

With SwiftKey’s acquisition, Microsoft got a 3-in-1 deal

According to Verge, SwiftKey was the best keyboard for the Apple (AAPL) iPhone in 2015, and the second-best keyboard for Google’s Android devices. Samsung Electronics’ (SSNLF) Galaxy S4 has also employed SwiftKey’s technology, which synchronizes users’ typing habits and predicts the preference for next words. SwiftKey has more than 300M million users and claims to have “saved nearly 10 trillion keystrokes, across 100 languages.”

SwiftKey uses an AI-based (artificial intelligence) neural network to predict preference for next words. SwiftKey syncs various users’ typing habits in the cloud. Thus, the more the platforms a user use on SwiftKey, the smarter it gets due to its machine learning and AI. SwiftKey is also said to be working on a new application that will predict and correct language.

Establishing Microsoft productivity

According to VentureBeat, with Swiftkey, Microsoft now not only has a keyboard app, but also a company that integrates AI, machine learning, and natural-language processing, which will likely go a long way in establishing Microsoft productivity services—namely, Office 365, OneDrive, and SharePoint in the cloud.

Investors who wish to gain exposure to Microsoft might consider investing in the iShares Russell 1000 Value ETF (IWD). IWD has an exposure of 3.4% to application software and invests ~2.0% of its holdings in Microsoft.

Now let’s zoom out and look at the larger picture: Microsoft’s overall strategy behind these acquisitions.

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