What do you do when you have billions of dollars worth of operational capital, an OS that is only valuable as a case study in bad forward planning, and no real plan for leveraging the Internet as a platform? Well, you start passing money out in hopes that someone else does.

Steve Ballmer announced today that Microsoft is hunting for 20 new startups a year for the next 5 years. The prize for getting onto Ballmer’s radar is anywhere between $50 Million and $1 Billion. Sounds like a good deal, right?

That’s A Neat Toy You Have There Kid…

Before you whip out your new AJAX enabled alarm clock and head on the next plane to Seattle, lets think about this for a minute. The one thing that money has a hard time buying is the entrepreneurial spirit. Specifically, the part of that spirit that allows entrepreneurs to see opportunities well before a huge corporation like Microsoft. By putting out the acquisition hook, Steve has made Microsoft the perfect pitch target. Whether they decide to acquire the company or not, they will still have the advantage of hearing a veritable army of ideas.

Fortunately for coders out there, there is one problem with this strategy. These days, the Redmond giant doesn’t have the sort of clout that it once did amongst tech developers. There are just too many other huge players in the game for Microsoft to be able to strong arm entrepreneurs, cherry pick ideas and then expect to still be able to draw more in. At first blush I was really weary of any strategy that involves Microsoft getting access to large numbers of entrepreneurs looking for acquisitions dollars, but I see this more as desperate attempt to get a foothold into a market that they have had a difficult time penetrating.

Certainly, Microsoft’s web software has been marginally successful, but it does not have the sort of traction as Google or Yahoo. More importantly, very few people really “care” about Microsoft as a web developer.

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My intuition is that Mr. Ballmer’s ovation is genuine. The fear of irrelevance is strong and with a company the size of Microsoft it is difficult to tap into real creativity from inside your own gates. If I were going to pitch Microsoft, I would still be weary but if you are a company looking out for an exit strategy, this isn’t a bad one.

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