Yes – Microsoft should buy Nokia or RIM

she feels like Microsoft should NOT acquire either RIM or Nokia. I disagree. Some of her points…

I’ve seen a number of Microsoft watchers tweeting that it’s all but inevitable that Microsoft will buy either Nokia or RIM to counter Google’s planned Motorola Mobility acquisition, announced on August 15.

I’ve got to say I still don’t think buying a handset maker makes sense for the Redmondians. Yes, owning the end-to-end pipeline works for Apple. But it’s not the way Microsoft — or Google, for that matter — has structured its mobile business.

Acquisitions of big companies are tough for any vendor to pull off well. Microsoft has had issues digesting companies that it has acquired in recent years. (Examples: Danger, adECN, aQuantive) Consequently, the Microsoft brass have been more inclined to partner (Nokia, Yahoo) than purchase — with the very obvious exception of Skype. Microsoft execs have found ways to structure its strategic partnerships so that Redmond gets what it wants from the participants without having to buy companies outright.

All valid points. I do feel however that Microsoft would be well served to acquire one of these companies and have complete control of the companies from end to end. While it might be a difficult acquisition and there would inevitably be some bumps along the way, the scale of the plans that Microsoft have demand no less. [caption id="attachment_5721" align="alignleft" width="210"] business acquisition[/caption] The problem with strategic partnerships (with Nokia etc) is that it always will take two to tango. Partnerships can be awkward, can break down and there can be large disagreements on long term strategic direction. For the record, I have never believed that the Nokia partnership was a good idea. I continue to believe that the level of acquiescence Microsoft requires from Nokia  would almost be at the level of a defacto acquisition. Both companies have a vision for the future of phones that (AT THIS POINT) seem to be complimentary but it’s hard to see how that can continue long term. An acquisition would change that. Even an acquisition of a business unit would be a better idea. Also, what happens if Nokia gets acquired by a third party? Even if there are bulletproof contracts and agreements in place, the new owner could always find ways to slow down/frustrate the progress of the Windows Phone work. Why take that chance? I believe that if you as a company have a large and complex vision with multiple components, you need to make sure that you control as many parts of the supply chain as possible. As I recently documented, Microsoft’s vision is as lofty and complex as it gets. I do feel however that Nokia would be a better fit than RIM. RIM have a great footprint in the enterprise BUT they arguably havent made the leap from old-fashioned phones to newer sleeker phones. Their brand is still a little more of a mixed bag and that transition would be a distraction for Microsoft at a time when they wouldn’t need that. Once again, Microsoft want to be relevant in the home, office, gaming, desktop, tablet, server and the Phone. A strategic acquisition would be one step closer to airtight integration.]]>