Microsoft’s acquisition of Vicinity - IDC’s Perpsective & Outlook

By David Sonnen

Microsoft has acquired Vicinity to add the following assets and capabilities to MapPoint.NET
  • Vicinity's marquee customers including FedEx, Texaco, and Marriott
  • Demonstrated ability to develop and deploy enterprise location services
  • Demonstrated ability to differentiate Web services through high customer satisfaction
Microsoft stands to gain additional credibility for .NET and experience in enterprise location services.The spatial information management (SIM) industry stands to gain acceptance among large enterprises.

On October 22, 2002, Microsoft announced that they had agreed to pay $96 million for Vicinity Corporation. Vicinity is a leading provider of Web-based location services and business intelligence. This acquisition brings Microsoft extensive enterprise location service hosting experience, Web-based business intelligence, and about 350 prestige Web accounts including FedEx, Texaco, and Marriott. The deal is expected to close in early 2003.

By acquiring Vicinity Corp, Microsoft will complement its MapPoint.NET platform by adding turnkey, hosted solutions for a variety of enterprise location services such as store locators and business intelligence.Microsoft expects to gain experience in enterprise location services and credibility within large enterprises for its MapPoint.NET platform.

Vicinity and Microsoft's business models are mirror images of each other. Vicinity bases its business model on customer satisfaction and quick innovation within a small, well-defined customer base - marquee companies with significant location-specific Web requirements. Microsoft is the undisputed leader in high-volume packaged software that is developed through a rigorous and lengthy process.

Microsoft is developing and positioning .NET as a platform for enterprise Web services, including location services. The Vicinity acquisition gives Microsoft a set of capabilities and clients that will help in Microsoft meet its objects and entrench .NET within enterprise IT.

We expect Microsoft to use Vicinity's installed base and technology to establish MapPoint.NET as a credible option for enterprise Web services. In 2001, IDC surveyed Vicinity customers and found extraordinarily high customer satisfaction. Microsoft will safeguard this customer satisfaction as an indicator of .NET's enterprise capabilities.

Microsoft will also convert Vicinity's current Java/Oracle technology to the .NET platform. If successful, this implementation will demonstrate .NET's ability handle large, high-volume enterprise Web services.

IDC expects MapPoint.NET to have a long-term effect on the spatial information management (SIM) market. If Microsoft is successful in adopting Vicinity's approach to customer satisfaction and enterprise Web services, MapPoint.NET's effect will be positive - accelerating the adoption of enterprise location services.

Published Thursday, November 14th, 2002

Written by David Sonnen

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