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Instant Analysis: Microsoft Corporation Acquires SwiftKey

By Evan Niu, CFA – Feb 3, 2016 at 2:40PM

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The tech titan scoops up the maker of the popular predictive software keyboard.

What happened?
Software giant Microsoft (MSFT -1.27%) has announced that it has acquired SwiftKey for an undisclosed amount. SwiftKey offers a popular third-party keyboard that is used on Android and iOS. Microsoft says the technology powers over 300 million devices. The predictive algorithms have saved an estimated 10 trillion keystrokes, according to Microsoft. That translates into 100,000 years of time saving.

Does it matter?
SwiftKey's technology is important because it uses intelligence to learn user typing patterns and smartly predict words. Predictive keyboards are now common on all mobile platforms, but SwiftKey is one of the leading apps. By scooping up the start-up (Financial Times unofficially pegs the purchase price at $250 million), Microsoft is expanding on its new cross-platform strategy under CEO Satya Nadella.

Not only will Microsoft continue to develop the app on Android and iOS, but it will integrate the core technology into its other products and services. That's the type of scale that only a major player can execute on, giving SwiftKey's innovative technology greater impact. Microsoft is flying high right now as investors embrace the new strategic direction, and this purchase is the latest piece of the puzzle.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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