Since 2007 I have been predicting on here that Electronic Arts (EA) would be bought out. At one stage it looked very much as if Apple were going to be the proud new owners. (And may still be). Now Reuters are reporting rumours that Microsoft will do the buying. Which must be true because they are denying it.

The fact is that EA would be very cheap to buy, because they have been making big losses for some time whilst the industry around them booms. These losses are because something is wrong within EA, fix that and you have bought a bargain.

Expert Wall Street analysts are saying that EA would be a bad fit for Microsoft. They are wrong and here's why:

• Microsoft (MSFT) are a software company. ERTS are a software company. So Microsoft would be buying more of the same.
• Microsoft have lots of platforms they need content for. Live (which will ultimately support many hardware devices), Zune, Windows, Windows mobile, the upcoming tablet, the 360 and the upcoming 720 (phoenix) that will run alongside it. Also they must be working on thin client smart TVs. That makes at least 7 platforms.
• EA own a truly formidable portfolio of studios that can be bought cheaply here. Put in harness and properly managed they are an outstanding resource in the industry.
• EA also own a fair amount of original IP. Once again this can be leveraged massively onto all those Microsoft platforms.
• If Microsoft don't buy EA then someone else will. And that someone else could be Apple or Nintendo, either of which would put Microsoft at a massive competitive disadvantage across many product areas.
• Microsoft have Natal coming. This has future potential beyond that even of Windows.