Which Fading Smartphone Company Is More Valuable To Microsoft, RIM Or Nokia?

colinneagle writes "Nokia and RIM, the two former leaders in the early smartphone market, are now basically at the end stage of their downward spirals. This is an opportunity for Microsoft, which wants to make some inroads in the smartphone market, assuming Microsoft it can play its cards right. The question is which firm is worth more. Both have their values, especially in the patent areas. In terms of just smartphones, Microsoft would probably gain more from RIM, because it could integrate BlackBerry Enterprise Server into its own server products. Nokia, though, is a much older player and probably has a lot more of a patent portfolio. The question then becomes which is an easier purchase. Nokia is a 150-year-old storied company. The Finns may not be too keen to let it go to an American firm. There is the distinct possibility Microsoft acquires both firms and keeps the best of both worlds for hardware. But where does that leave OEM partners like LG, HTC and ZTE?"

Comments

Easy - RIM

[nurb432]

This is because RIM is 'corporate' orientated, so its a natural for Microsoft. Nokia, is consumer oriented ( Apple's territory )

But, considering all their handset technology is different, would it be wroth the trouble/money just to get the BES, that wont work with a windows phone anyway?

More likely they will both just fade away and someone like Google will grab the patents just before they go under water forever.

Re:Easy - RIM

[lightknight]

Indeed. The technology itself is non-transferable (it's probably faster to write new apps for a Windows phone than to attempt to port either company's vast repositories of applications). The employees might be worth something, in that their expertise with creating phones makes them a valuable asset; however, since they are not owned by the company, and can easily resign / retire if / when MS attempts to acquire either company, it's probably best to approach them individually, and offer them a job with better pay (which, on the whole, also happens to be cheaper than buying the company).

So yeah, the employees and the IP are the most valuable items of either company. Their current customers will jump ship as soon as MS announces an intent to acquire the company (no loyalty, haha), and the software is for a platform that MS does not intend to run or emulate on its phones, making it worthless. Its manufacturing assets are also relatively worthless, as they are probably out of date, and would require pointless amounts of capital to bring them up to a competitive position; remember, they're competing against the likes of Foxconn & TSMC, who are somewhat brutal in their controlled costs areas and general inefficiencies.

That said, the Nokia name is probably the better buy; Nokia has been, in times past, associated with indestructible cellphones (there is a meme about it), and a fair amount of quality control (currently, they are associated with 'not getting their acts together / an inability to fix minor software issues,' which while being bad, is nothing compared to RIM's stupidity). RIM, on the other hand, has had its name dragged through the dirt over any number of software / government issues, which leaves a stench. If MS buys RIM, the Canadian government will love them for a bit, then probably try to tax them more / ask them to 'increase jobs' at the acquired locations (politics). If MS buys Nokia, Finnish government will love them for a bit, then probably try to tax them more / ask them to 'increase jobs' at the acquired locations (politics).

There is, however, an issue that no one has touched -> is it a good idea for MS to acquire either of them? And the answer is no. For MS to dominate, let alone be competitive, in the phone market, it needs to get in shape; you don't lose weight by eating more. Any merger by MS, of either or both of these companies will result in two things: 1.) the M&A guys patting each other on the back, as they will make out like kings (the WSJ & Reuters will trumpet that the merger is bringing in a new era of 'Mobile Synergy' or some other bullsh*t, only to recant it all later when it's found that 'MS didn't properly integrate the Nokia / RIM units, which is why the gains were never realized'), and 2.) it will be revealed as a failure of leadership when a year later, the news reports that MS overpaid for its acquisitions (compounded by the number of Nokia / RIM employees who, having spent a year at MS, spread their wings for clearer skies...which will be several months before the Windows Mobile unit reports a catastrophic loss of income).

MS/Nokia

[Anonymous Coward]

MS already owns Nokia

Re:MS/Nokia

[Dr.Dubious DDQ]

I was just thinking they should buy RIM outright (analogous to Google buying Motorola Mobility), since they already effectively "own" Nokia without actually having to deal with the regulatory or financial hassles of literally "owning" them.

neither

[neurocutie]

I dont see MS benefiting for buying either. MS has gotten what it needs from its deal with Nokia. If WP doesnt do well under Nokia, RIM isnt going to help.

Re:neither

[gadget junkie]

I dont see MS benefiting for buying either. MS has gotten what it needs from its deal with Nokia. If WP doesnt do well under Nokia, RIM isnt going to help.

I do not think that MS has got what it needed; it got what it wanted, and given MS track record in corporate deals, the two are such distant relations that under Catholic law they could marry without dispensation.
AFAIK, Ballmer wanted to jumpstart MS's phone business, and with this deal he will have some numbers tucked in; but the best comparison is with the deals mobile operators do with Apple: if there's money, it trickles Apple's way, not to the operator's coffers. Then again, in the mobile space MS lacks the factors that make it dominant on the desktop:

1. huge installed base;
2.a teeming ecosystem of programs that won't work on other platform;
3. a HUGE corporate market using his program/services exclusively.

I am not in Bill Gates' confidence, but given the above, I'd have gone for RIM everytime; it's already in the corporate space as a service, while nokia is there as a product, and as an indifferentiated product at that, just like any other phone, and having had an HTC and a Samsung, I must say that the competition is fierce; the only thing Nokia could have going for it is backward compatibility, which they just sold down the river for a neat billion bucks; my personal bet is that they will go back to producing toilet paper and car tires, maybe with a chapter 11 in between.... unless Ballmer decides to throw bad money after the bad.

Partnering with Microsoft

[Anonymous Coward]

"But where does that leave OEM partners like LG, HTC and ZTE?"

The same place where every Microsoft partner ends up.

Re:Partnering with Microsoft

[davester666]

...face down in the mud, with a sore ass...

Re:Partnering with Microsoft

[1s44c]

...face down in the mud, with a sore ass...

...And losing blood fast...

As far as I can remember it's been the same for every company that has dealt with Microsoft. Nokia really self-destructed on that one.

Buy two losers!

[matunos]

Anything to avoid creating a good product themselves, amiright?

Re:Why buy?

[ShanghaiBill]

Why buy at all?

Patents. Microsoft can use the patents to hold back their competitors. If they don't buy, those patents will go to someone else who will use them to hold back Microsoft.

Not everyone has to be like Apple.

Yes they do. You can't just opt out of patent wars. Until the system is reformed, you have to play both offense and defense aggressively.

Re:Why buy?

[SplashMyBandit]

Microsoft's competitors also have patents. Some of which probably also apply to the desktop too. Microsoft is as much at risk by a patent war as Apple. It is Mutual Assured Destruction and why the Big Boys don't usually attack each other over patents (they use them to crush smaller players and individual inventors - completely counter to the original intents of patents, but that is how the system is being used now [down with idea/software patents!]).

Neither

[Coward Anonymous]

Apple is proving neither is relevant outside of their patent portfolios.

Nokia is using Windows because its own software stack is worthless and it has been having trouble producing a credible handset. The Lumia is nice but is not really competitive.

RIM's software stack is notoriously bad - hence the death march to BB 10. Its hardware is woefully not competitive and its business phone moat seems to be evaporating very quickly as Apple is demonstrating that it is taking security and enterprise deployment and provisioning very seriously (the recent security white paper as a case in point) - convincingly enough that Fortune 500 companies are dumping BB in favor of iPhones.

Given that Microsoft is already in bed with Nokia it is likely cheaper and less risky for MS to bankroll Nokia for a while in the hopes that it lifts off the ground than to buy it outright. RIM on the other hand, offers nothing.

Re:Why would an additional purchase help Microsoft

[UnknowingFool]

MS is trying to avoid a future where the move to mobile leaves them behind if they focus only on desktop. The problem for MS is that despite a ten year head start on tablets and phones, they are behind the likes of Apple and Android. Instead of forging a separate effort in mobile, MS has decided to forcibly capture a large number of future mobile developers by pushing them to design for Metro by making Win 8 default to Metro.

Re:We need a paradigm shift

[KiloByte]

not only will you get the RIM keyboard on the iPhone, but dogs and cats will sleep together

A phone without a physical keyboard is unfit for any serious use, so use something real like N900. Mine's currently on my bed, next to a dog and a cat, sleeping together. ARM processors have a heavy stress on sleep modes, so I guess you can count the phone as sleeping as well.

Re:We need a paradigm shift

[Archangel Michael]

A physical keyboard on a phone? HAHAHA Really, all you get are smallish buttons that are too easy to mash together as you try to type. Having come from a phone with a "keyboard" (Blackberry) and currently using a Droid w/o Keyboard, I can assure you that I know a thing or two about both.. And by far, I can type much faster with the swype keyboard than hunt n pecking with my fat thumbs.

But that is the great thing about opinions, neither one of us is "wrong" we just have different opinions.