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.