Is Microsoft's next move buying Nokia or RIM? Nah...

Is Microsoft's next move buying Nokia or RIM? Nah...

Summary: Does Google's acquisition of Motorola mean it's finally time for Microsoft to buy Nokia or RIM? I still don't see the potential gains from a handset-maker purchase offsetting the losses.

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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.

Did Microsoft want and need all of Yahoo? No. Instead, Microsoft got the Yahoo search traffic (and select Yahoo talent) without having to pay $45 billion for the whole shebang. Ditto with Nokia. Did Microsoft really want to become a phone and tablet maker, alienating its existing OEM partners? Instead, the Softies found a way to get access to Nokia's patents, select technologies (cameras, maps) and worldwide distribution network for something over a billion dollars.

What would Microsoft gain from buying Nokia outright? Lots more employees, a dying operating system (Symbian) and manufacturing capabilities enabling it to compete with its existing partners. Hmmm. And if it bought RIM? A platform that's ebbing, not growing.

Google execs said during a conference call about the pending Motorola acquisition that the top five Android handset partners were notified about the pending deal and were onboard with it. (Microsoft's Windows Phone OEMs said the same when Microsoft announced its deal with Nokia earlier this year.)

And remember: Google already has tested the waters in selling Google handsets with the Nexus family without alienating its other OEMs. The Verge quoted Google's Senior Vice President Andy Rubin during this morning's  conference call as saying: "We have the Nexus program and the lead device strategy. What we do is we select an OEM around Christmastime of each year -- a chip company, everything else -- and they all huddle together in one building, and around the holidays a new device pops out. That won't change, Moto will be a separate business and part of that bidding process."

Why didn't Google simply license Motorola's patents instead of buying Moto outright? That, to me, is a more ponderous question. After all, Google execs admitted today that attempting to protect the Android vendors from current and future lawsuits was a big reason that Google purchased Motorola Mobility's 12,500 existing and 7,500 pending patents. It seems like Google could have gotten what it wanted via a less-pricey licensing deal rather than a $12.5 billion acquisition.

This isn't the first time Microsoft watchers have suggested that Microsoft could hasten Windows Phone's growth -- or, more accurately, reverse its continued slide -- by buying RIM or Nokia. I didn't think it made sense before and I still don't see why it would. You?

Update: An opinion piece in the Wall Street Journal makes the point that one reason Microsoft might consider buying Nokia is to prevent any other company from buying it. If another vendor did buy Nokia, I am sure there are plenty of protections and guarantees built into Microsoft's Nokia agreement to make it unlikely that the Softies would lose their BFF.

Topics: Nokia, Banking, Enterprise Software, Google, Hardware, Microsoft, Mobility, BlackBerry

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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57 comments
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  • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

    Their next move should be to abandon mobile. They gave up already.<br><br>PS. There is no room for a third party MOS.
    Return_of_the_jedi
    • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

      @Return_of_the_jedi Linux should give up on developing dekstop OS. There is no room for third Desktop Operating System !! :)
      1773
      • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

        @1773 <br><br>If it helps make your day, <a href="http://blogs.computerworld.com/16501/could_linux_become_the_worlds_most_popular_operating_system" target="_blank">they did already</a>.<br>Better yet, they never made a play for it, or spend 1/2 billion on adverts either.<br><br>PS. There is no room for another DTOS.
        Return_of_the_jedi
      • He's worried that MS will start eating away at Android over time

        @1773
        Like MS Office, XBox, Windows Server, ect has to their respective counterparts.
        William Farrell
    • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

      @Return_of_the_jedi Microsoft is trying to come back with Windows Phone7, though I'm not really sure where they are going with Desktop Winodows 8, making it look like Mobile 7. Unifying the OS?

      As for an 3rd party MOS, how about Mozilla trying to move in with a mobil browser OS with their Boot to Gecko project?
      swattz101
      • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

        @swattz101

        Don't know, haven't seen it yet.
        YetAnotherBob
    • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

      @Return_of_the_jedi
      You next move should be to stop trolling. You should give up already.
      illegaloperation
      • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

        @day2die <br><br>Go back to PCWorld and feed the trolls. It looks like you have plenty of food.<br><br>PS. I'm not hungry.
        Return_of_the_jedi
      • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

        @day2die LOL
        biobiobio
    • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

      @Return_of_the_jedi

      the same was said about the xbox. look now.
      neonspark
      • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

        @neonspark Yep, and only took $20 Billion in losses to do it. At this rate, it will be made back in only 300 years.
        YetAnotherBob
    • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

      @Return_of_the_jedi As fickle, twitchy and non-loyal mobile users are... there is always room, and there is always play.
      ItsTheBottomLine
    • You're deluded jedi

      @Return_of_the_jedi .. there is more than enough space in mobile for more vendors: mobile is that big.<br><br>Personally, MS could buy Nokia outright or simply stick with the cross-license deal. By placing WP7 on the hardware does make sense. I think you've misread the situation.<br><br>Symbian may be dated, but that's just the point: MS would be wise to push Nokia toward re-configuring all new and compatible h/w for WP7. <br><br>Lastly, the reason it makes more sense that MS do this, is because they really couldn't hope to compete without being in hardware - either directly or with a major OEM partner (which they do). This play from Google does, to a large degree, force MS's hand into making a move. If, as you say, MS abandon mobile (and i'm pretty convinced they won't), they'd be consigning themselves to irrelevance in the fastest growing computer-user space.<br><br>With a potential audience of over 4 billion (to be fair, 3rd world countries are unfortunately out of the mix - that covers anything in excess of 4 billion), even a modest user base of 50-100 million users from that huge market, creates a very lucrative, new revenue stream for any mobile player - for that matter - with a mobile computing device worth marketing.
      thx-1138_
  • Why? This is a dumb desperate purchase by Google

    This purchase makes no sense when you look at the big picture. Google may be getting some patents to defend themselves, but they will also be opening a big can of worms they may not be able to handle.

    Remember, Google's primary business involves collecting data and selling data.

    Also, in the long run this move will HURT the adoption of Android.
    wackoae
    • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

      @wackoae <br><br>It's really funny to watch you'll squirm.<br><br>But you said they should have bought Nortel's patents, eh?<br>What, you don't like MOTO patents?
      Return_of_the_jedi
      • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

        @Return_of_the_jedi Oh you can tell the Apple fanboys do not like this at all! They thought Apple and MS had their foot on Androids Throat and now it looks like there's more of a fight than they anticipated.
        slickjim
      • The only one squirming here, is you

        @Return_of_the_jedi
        This really worries you, I can see.
        William Farrell
    • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

      @wackoae
      No doubt.

      Google hasn't handle the hardware business well at all.
      illegaloperation
    • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

      @wackoae

      better yet. during the upcoming google's anti-trust trials, the dominant OS bunlding the company's services in the said os being sold by the same company that makes the hardware is an anti-trust prosecutor's dream come true.
      neonspark
      • RE: Is Microsoft's next move buying Nokia or RIM? Nah...

        @neonspark Android is not sold - it is open source. Why is it so hard for some people to understand that? If you wanted to, you could build an android phone tomorrow and put android on it, vanilla or with your own mods, WITHOUT PAYING GOOGLE A CENT!
        So how does antitrust apply?
        radleym