Microsoft’s probable investment in Dell’s buyout reflects a broader strategy of using its vast cash reserves to fund competitors to Google, Apple and Amazon. This strategy emerged several years ago, with ten billion to acquire Skype (facing increased competition from Facetime) and billions invested in (or given to?) Nokia to support its conversion from the Symbian to Windows Phone. Its pace has accelerated over the past 6-12 months, with yet more billions allocated to its internal hardware team to develop the Surface tablet, $300 million to Barnes & Noble to boost its floundering Nook e-reader (which runs Android for the time being), and now more billions to Dell so it can go private.

These investments don’t make any sense from a shareholder viewpoint – since I own the stock, better to raise the dividend and avoid a possible repeat of the $6 billion aQuantive loss/writeoff. But Ballmer recognized that Microsoft’s internal efforts to adapt to a non-desktop, mobile-centric world are not working. He instead is acting like a venture capitalist, making lots of investments and hoping that Microsoft’s internal efforts, combined with partners with solid financial resources, will pay off. We’ll see what happens, but poor 2012 holiday season sales from Nook and Nokia/Windows Phone (in the US at least) are not an encouraging sign.