Microsoft to buy Nokia?

Eldar Murtazin tweeted that Microsoft is planning to purchase Nokia outright. There will undoubtedly be much better analysis on this topic other places on the net, let me just provide my unvarnished opinion that this is insane. I mean, Mr. Murtazin might be right, just that if this happened it would be an incredibly foolish move on Microsoft's part.

Nokia is not the failing company that American observers would guess it is, it has a market cap of over $30B, it dominates in many large oveseas markets, and it makes money. But it's hurting. Its market share is dropping like a rock and the commitment to WinMo 7 is something of a Hail Mary pass against the momentum of iOS and Android. Android in particular is very threatening to Nokia, it being the go-to OS for unlicensed smartphones from Chinese manufacturers these days instead of Symbian.

From the tech industry perspective Nokia is a company soon to be in decline if it isn't already, and it's hard to see what strategic value Microsoft would find in that acquisition. Microsoft hasn't been as effective at absorbing the companies it buys as it used to be, with Danger being the prime example. It remains to be seen if Skype will actually be integrated into Microsoft's various platforms or if it was a defensive purchase to keep it out of Google's or Facebook's hands. Kinect is often touted as a brilliant acquisition, however it wasn't an acquisition but an internally developed technology by Rare with technology licensed from Primesense.

It's hard to imagine that there's anything that $30B could buy that you couldn't build and own for that same amount of money. Market share, brand recognition, state-of-the-art technology, etc. can all be purchased, but it's like purchasing a sand castle. You must act immediately to protect it or it will quickly get washed away with the tides. I'm not sure $30B even buys them time, in the sense that they'd suddenly leap into the phone manufacturing game. They'd make immediate enemies of their current hardware partners and it would still take a significant amount of time before a true Microsoft phone ever emerged, if it ever would. It seems like a waste of money any way I think of it.

Has Microsoft lost it's touch? I think it might have. Steve Ballmer's problem seems to be focusing on what is relevant right now instead of what will be relevant 5 to 10 years from now. Skype makes sense right now, but I predict that Skype's bread and butter of bridging VoIP to POTS will become less and less relevant as the decade progresses. Nokia may be a bargain buy right now, but its competitors are bringing the battle to it and besides the aforementioned Microsoft partnership it's quite unprepared for the next 5 years (speaking of which, buying Nokia after that partnership is in place is totally buying the cow when you are already getting the milk for almost free). Danger was a smart purchase but with a very shaky integration within Microsoft, and the Kin was a visionary product but it was inexplicably killed within months of launch. Maybe there's an amazingly brilliant strategic plan underway to take on all of Microsoft's competitors simultaneously, but it seems much more likely that it's grasping at straws. If nothing else, Microsoft is definitely going through a rough patch, and buying Nokia would just make it rougher.