Don Dodge (on the MS Emerging Business Team) has written an excellent post on entrepreneurship and Microsoft acquisitions. Having been acquired by MS earlier this year, I found that the post closely mirrored our experience at MessageCast. Some interesting quotes:
What is most important to Microsoft when making acquisition decisions? People are the most important factor in any acquisition. Microsoft looks for talented engineering teams with vision and passion and experienced management teams. Second is technology and IP that can add value to an existing Microsoft product.
We heard this from the MS acquisition team on many occasions - it's about the people/team, not just the technology.
Entrepreneurs should remember this. The "barriers to entry" are most often market position, not technical brilliance. I have heard start-ups say "we have a two year lead on our closest competitor". In fact, I have said it myself at previous start-ups. I was wrong. Most technologies can be replicated by a talented engineering group within a year or two.
Said another way - make vs buy is always a consideration.