Microsoft's hit or miss strategic partnership history

Microsoft's hit or miss strategic partnership history

Summary: Microsoft has some head scratching strategic partnerships such as Barnes & Noble's Nook, but a few have played out decently, at least in terms of distribution.


Are Microsoft's lame investments and partnership strategies an indication that its business is a mess? Not necessarily. Microsoft appears to merely be a hit or miss strategic investor. 

A Wall Street Journal column noted that Microsoft's partnerships with the likes of Barnes & Noble, Best Buy, Yahoo, Nokia and Dell are all lacking in some way. The implication is that Microsoft is limping and it prefers to partner with companies that have similar issues.

Another way to look at Microsoft's partnership issues is that it is a so-so strategic investor that has as many hits as misses. Microsoft also repeatedly gets sucked into distribution as a primary reason to do a partnership. Why? Microsoft has been playing from behind in multiple categories such as smartphones and tablets.

Here's a look at Microsoft's deal-making, the rationale and whether or not the partnerships make sense:

Barnes & Noble. Microsoft bought into the Nook tablet franchise and the e-reader movement. Barnes & Noble is retreating from the tablet market and perhaps Microsoft garnered some intellectual property know-how. The "Wook" never happened. Rationale behind the deal: Who knows? What the Barnes & Noble partnership means: Microsoft can make some spectacularly bad investments.

Nokia. The gimpy smartphone maker made a big bet on the Windows Phone platform. Microsoft and Nokia are now connected at the hip, but neither company is lighting up the market share standings. Rationale behind the deal: Microsoft really didn't have a lot of hardware partner options. Samsung and HTC were with Android. And Apple and BlackBerry had their own mobile platforms. What the Nokia partnership means: Microsoft still has the potential to garner market share globally with the handset maker and the two companies have to stick together. Overall, the Nokia partnership isn't a bad deal for Microsoft but will take time and patience. Without Nokia, there's no way Microsoft would be in the running to be a No. 3 smartphone platform. 

Best Buy. Microsoft is creating Windows zones inside Best Buy. Sound familiar? That's because Apple and Samsung already have turf inside Best Buy. Rationale behind the deal: Microsoft needs to sell Surface devices and needs distribution. What the Microsoft partnership means: Microsoft is late to the game, but Best Buy is an important partner.

Yahoo. The Yahoo partnership with Microsoft is critical for the software giant. Without Yahoo, Microsoft would never be a search player. Yahoo provided distribution for Bing, and Microsoft merely has to keep revenue guarantees going forever until it can measure up to Google's click-through metrics. Rationale behind the deal: Microsoft wanted to be a search player. What the Yahoo partnership means: There wouldn't be a Bing without Yahoo's distribution. Microsoft is now using Bing as a platform across its products.



Dell. Microsoft floated some capital in Dell's going-private plan with Michael Dell. Rationale behind the deal: Microsoft sees some basic return on its investment and keeps a partner in the fold. What the Dell partnership means: Not much, but the two companies are partners beyond the consumer front.

The overall theme here is that Microsoft's partnerships may have some reflection on the software giant's consumer efforts, but also keep in mind where the company isn't cutting deals: on the enterprise side. Microsoft's enterprise business is humming along.

Topics: Microsoft, Tech Industry

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  • Not A Single Success Among Them

    Every single one ‌of those "partners"‌ (victims, more like) has been injured to some degree. Microsoft killed‌ Sendo, and now it is helping Nokia along the same path.
    • Microsoft kill?

      Nokia was already dying, the Microsoft investment at least gives it an outside chance of surviving.
      • Re: Nokia was already dying

        Before the Microsoft deal, it was profitable, not "dying".

        Now it is losing money.
    • @ldo17

      "Not A Single Success Among Them"

      Yup... That's the reason they partnered with MS. If they are successful, why in the world they need to partner with MS?

      I think Larry missed out Apple(Strategic partner in terms of search. Rationale behind the deal: To reduce Google's revenue. What the Apple's partnership means: MS will be with Apple until Apple comes up with it's own search. Until that time, bing is going to be of great use).
      • Nokia's decline double it's downward pace after Microsoft alliance.

        Nokia was selling for $14 per share in February 2009. It sold for $11 per share two years later when the alliance with Microsoft was made. Two years after the Microsoft alliance, Nokia is selling for $3.50 per share. A $7.50 decline or $3.75 per year decline vs a $1.50 per year decline after the Microsoft alliance.

        The CEO of Nokia is the 8th largest holder of Microsoft stock in the world. Why else would Nokia double it's downward decline if not for saving the CEO money on his Microsoft's stock.
        • Nokia is basically, a startup in the smartphone market,

          and like all start-ups, it wasn't going to be an immediate nor an overnight success.

          Nokia is still huge player in the cell-phone arena, but in the smartphone industry, it's still a baby, but a baby with huge potential, and right now, it's on the rise, with WP8 which has already captured about 5% of the market, and growing steadily.

          Perspective is very important when doing any kind of analysis of the markets, and the approach which people like you take, is to just attack anything related to Microsoft. That's not analytical in any way. Your comments are nothing but pure junk.
          • Re: Nokia is basically, a startup in the smartphone market

            You got to be kidding. They INVENTED the concept of the smartphone.

            Another effect of the Redmond RDF seems to be amnesia...
  • Long term investment

    Nook will get more prominent space in Win 8.1 and especially in 8 inch Win tablets. MS is looking for long term sustainable success and Nokia will definitely help them to achieve that in the mobile space. It’s just a matter of time that Surface tablets will wipe iPads from the enterprise market space.
    • post sounds like you sit on Microsoft long term

      planning board, but that's highly unlikely if your posting on zdnet.

      When you say Surface tablets will wipe out ipads are you talking in days, weeks, months, years, decades or centuries?

      Love your new picture...what are you a cowboy or something on that order..........
      Over and Out
      • that's probably...

        ...because someone who is sitting on microsoft planning board is paying him
        • @ljenux

          In that case, Owlllllnet is more rationale than us. He is doing a job and getting paid. And you and me are wasting our time in the conversations. I would really love to get a job like that. I would even post double comments in those cases.(Note to MS, Google, Apple or whomever it may concern)
      • @LMint15_W8.1_Pro

        Actually, Owl*net said MS will wipe out iPads from the enterprise market. Not from the entire market.

        But still, it is going to be a hell of a task.Definitely not in days or weeks or months. Slight chance with years. More likely in decades. Even more likely in centuries :-P

        PS: Also conditions applied on the outcome. MS might also be wiped out in the tablet wars.
    • Re: Long term investment

      Nokia has been following the Microsoft strategy for two years now, losing money all the way. How much longer can it afford to keep this up? Other companies are already sniffing around, looking to buy it out.

      How can I put this more clearly? NOKIA IS CIRCLING THE PLUGHOLE!
  • whoever...

    ...went into business with microsoft is now suffering.

    nokia was no1 in mobile phone, where is it today?
    at least in my country no one even tries to market them, let alone tries to sell them or use them hahahahahah what a joke of a partnership
    • Actually

      Nokia was suffering even before their partnership with MS, if I remember correctly.
      • Re: Nokia was suffering even before

        Before the Microsoft deal, it was profitable.

        Now it is losing money.
  • Barnes & Noble wasn't about business growth

    That was a payoff to stop the court case that was in danger of collapsing Microsofts "licensing of Android OEM" program. B&N were well on the way to exposing it as a raw "demanding money with menaces" scheme that should have been (and still should be to this day) persued by anti-trust authorities around the world. See for the full story.
    • "Rationale behind the deal: Who knows?"

      was just going to say the same thing - you beat me to it. I'm still suspicious that MS doesn't really get much from these deals - just a scare tactic.
    • Right

      Yeah, giants like Samsung couldn't fight the Microsoft android patent claim, but little B&N not only beat the claim, but forced MS to pay them to keep silent. Awesome.

      Microsoft got direct access to B&N digital books (college) and will most likely prevent any of their competitors from buying or investing in B&N as they head down the same path as Borders.

      What did B&N "win"? Selling a portion of their business for cash?

      If someone files a bogus patent lawsuit against my company and the end result is they become a part owner in my business, then I'm pretty sure I didn't win. In fact, I'm pretty sure they ended up getting exactly what they wanted.
      • Re: giants like Samsung couldn't fight the Microsoft android patent claim

        Who says Samsung is paying Microsoft any patent-protection money?