Yes – Microsoft should buy Nokia or RIM

August 15, 2011

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 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.]]>

Mike Johnson is a writer for The Redmond Cloud - the most comprehensive source of news and information about Microsoft Azure and the Microsoft Cloud. He enjoys writing about Azure Security, IOT and the Blockchain.

All Comments

  • Couldn’t agree more. Seems penny wise and pound foolish

    Obinna Emeka August 15, 2011 3:22 pm Reply
  • I think the issue is that it’d just be plain too expensive for the added benefits they might get. They’re a software company, not a hardware company.

    Billy Moffat August 16, 2011 1:59 am Reply
  • Let´s put things in perspective. Why should MS buy Nokia in the ligt of the Gomoto merger. Untill now Google´s failures have been making
    MS stronger, more competetive and even more profitable. It´s failure to make a deal with FaceBook and Twitter has driven these
    companies in the arms of MS. This applies also to Yahoo. The failure to rail in
    Nokia has given MS the chance of a lifetime (MS, the comeback kid is aroud the
    corner). Google´s failure to be innovative and create it´s own technology drove it´s
    rivals (including MS) to team up and secure patents from Novel and Nortel
    Networks, giving MS and it´s partners more patent protection and amunition. The
    failure to be truly innovative and develop it´s own technology have also given
    MS and others (MS, Oracle and Apple) the possibility to sue Google/Android
    and it´s partners, creating a profitstream for MS. It´s failure to develop it´s own technology has forced Google
    to spend billions of dollars to try to acquire patents and (now) to acquire
    Motorola, the money losing mobile hardware company, which operates in a very
    very competetive market. Since selling search/Ads makes up the most profit of Google
    (97%), Google has now embarked on another money losing adventure in which it
    will have to compete with it´s own Android partners (Samsung, HTC. LG etc). These same partners will now be looking to MS for cooperation in the mobile scene. Google is constantly shooting itself in the foot and soon it won´t be able to stand on it´s own feet. Since the domination of the mobile
    market changes very fast (MS, Nokia, Apple or/and Google), it´s likely that Google (mobile) will not be around for
    long. MS acquiring Nokia (is a better fit than RIM indeed), means that MS will be making a big (and same) mistake that Google is making, by competing with it´s partners and investing in a money losing venture. Google really needs it´s partners to be succesfull, and with the Motomerger it´s risking this. The patent story as a protection for Android and it´s partners is a weak shield, because most Motopatents have to do with older technology and does not protect against current MS and Oracle patent infringement cases. Nokia at this moment is an empty shell, and is motivated to compete heavily against Google and Apple. It´s dominant position in China also gives it an edge. Any acquiring of Nokia by MS rivals, with MS in the Nokia background, would be an expensive, and not to mention money losing venture at this moment. Benefiting from the failures of Google is important now for MS, and there is no need to acquire an empty shell (Nokia). With more than 50 billion in the bank, MS can bide it´s time, when it´s the best moment to do this (like say when the Nokia-MS venture is succesfull). 

    R Canwood August 16, 2011 10:25 am Reply
  • interesting perpective

    Darryl Hudson August 17, 2011 4:17 pm Reply

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