Dividends and Microsoft inks Nvidia game deal

If you think about a small entrepreneur, there are many tasks he/she has to do well, but the entrepreneur is not expected to do everything inhouse. It is normal to use multiple suppliers to ensure customer satisfaction is high and sales are repeated. As the company grows to become medium sized and perhaps into a large company, while the tasks still have to be done well, the company is more dependent upon its partners. Most companies do not do everything themselves; most companies use partners or suppliers to do the bulk of the work, the companies provide the end result. You will hear or read about discussions should the company do in house or external supplier and there are multiple variations. There are benefits to doing projects inhouse and using suppliers, the reality is if you look at the insides of a company, they are using many suppliers.

In an article by Foo Yun Chee and Stephen Nellis of Reuters, one of the biggest software companies Microsoft is trying to enhance its gaming division with a purchase of Activision. The deal is being held up by regulators in Europe and the US. To ensure more users have access to Microsoft games, Microsoft is partnering with Nvidia, best known for making silicon chips to ensure computers run faster and smoothly. Nvidia has a division called GeForce Now which is a streaming service for gamers and has over 25 million users in 100 countries. The partnership with GeForce Now, according to Phil Eisler, VP and GM titles such as Microsoft’s games such as Minecraft will be available right away. Games from Activision such as Call of Duty will have to wait until the completion of the deal between Activision and Microsoft. The deal is for 10 years.

Nvidia’s GeForce Now supports the Microsoft acquisition of Activision. Microsoft by signing up partners hopes to both put pressure and show the regulators Microsoft is willing to open up Activision games to a wider audience. While the regulators have concerns over less competition in the gaming industry, Microsoft is open to greater co-operation for at least 10 years. Microsoft sees buying Activision as growth in the mobile and cloud gaming segments.

Linking to dividend paying stocks, if you read stories about the early days of manufacturing automobiles for example Ford, most of the operations were done in-house in the Rouge plant. Mr. Ford liked it that way and for a long time he was successful. Over the decades, auto companies asked why are they doing everything? why not just put things together and sell the finished product. The growth of supplier auto parts companies grew and few customers realized the auto companies did not make everything. The growth of supplier parts lead to globalization of parts, to both lessen the costs and let others specialize in the parts. Now we are in the midst of some changes to the model, and it is important to know how your company investments are filling in the dots. What is the relationship? how does the model work or is working?

There are more questions than answers, till the next time – to raising questions.


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