While much attention was focused on the end of Microsoft (News - Alert)'s long and downright strange search for a new CEO, one particular item slipped through that's every bit as worthy of paying attention to as the filling of the company's top slot. Microsoft made a deal with Foursquare (News - Alert), not only bringing some hefty investment to the company, but also making a new market for its array of location data services.
Under the terms of the agreement, Microsoft put a hefty $15 million into Foursquare as part of a “strategic investment” into the company. But additionally, Microsoft embarked on a commercial licensing arrangement that allows Microsoft to add data previously compiled by Foursquare into Microsoft products. This cash infusion joins the cash raised from Foursquare's Series D fundraising round, in which the company brought in fully $35 million just back in December, so now the company has a healthy $50 million total for the round.
Reports suggest that the deal had been in the making for a good while, but the complexity involved in a two-part deal made for some unexpected delays as issues cropped up. But as this deal concludes, it's already got many looking at the idea of who else could launch a similar partnership with Foursquare, giving Foursquare the potential of a whole new business model. The Foursquare data goes into several other apps already, providing location services on things like Instagram, Pinterest and Uber. While many of these apps are using the Foursquare API, which is free, the deal arranged with Microsoft provides access to much more powerful data, like the real-time recommendations feature that might give Microsoft users instant access to points of interest in a particular region when the user walks, drives, or similarly moves into said region.
Early word suggests that the Foursquare data could become part of not only Bing, but also more specific apps on Windows mobile devices as well as local services. With several other tech figures getting into the location-based market like Google and Apple (News - Alert), it's clear that having skin in that game is going to be an important part of future position. With Microsoft taking a small but healthy slice of the mobile device market at last report, having that comparable feature and improving on it will likely go a long way toward keeping Microsoft in said game. However, given that the Foursquare deal isn't exclusive with Microsoft, one of Microsoft's competitors could snag its own slice of Foursquare bonus.
One of the biggest things that Microsoft really needed to do in order to get in—and stay in—the game as far as mobile devices go was to give current Android and iOS users a reason to switch. Since the market was so generally entrenched with these two, just pulling from faltering camps like BlackBerry (News - Alert) likely wouldn't have been enough to do the job. Keeping up with location-based offerings will likely be a help on that front, but Microsoft will have to refine the location data and put it to better use that can't be easily replicated in order to stay ahead of the curve.
Microsoft may have came late to the mobile device party, but it's certainly bringing several key advantages with it. It's not letting grass grow under it, make no mistake there, but staying in this particular race is going to be quite a challenge for even a company like Microsoft.