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

[Missing.Matter]

Then again, Nokia has a strong presence around the globe. For instance, this report indicates that Windows Phone is outselling iPhone in Russia, and there were reports recently (admittedly which originated from Microsoft so obviously to be taken with a large dose of salt) that Windows Phone is outselling the iPhone in China as well.

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).

Re:Easy - RIM

[jo_ham]

Windows phones probably are outselling iPhones in China because the iPhone still has limited carrier selectivity over there at the moment, at least according to all the news reports about Chinese carriers indicating they'll be offering it "soon".

For example, it's still not on China Mobile (the world's largest cellphone network) as of May 2012: http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/electronics/9268854/Worlds-largest-phone-company-China-Mobile-in-iPhone-talks-with-Apple.html

Re:Easy - RIM

[jo_ham]

I've always wondered, why is that you make these kinds of posts?

What does apple's market share matter to you, and why do you always rush in to praise them whenever possible?

It just seems very odd for a disinterested individual to have so many factoids at hand and such a strong desire to promote and defend a company which already has a billion-dollar advertising and PR budget.

I think it says more about you than it does me. Where do you get that I'm "praising" Apple in my post? All it offers is a potential reason for Microsoft's original statement (that the OP questioned might be a lie because Microsoft said it) to be true. My comment was neutral regarding Apple - it neither praises nor condemns.

Apple's market share doesn't bother me at all, but I thought the point of a discussion site was to have, y'know, actual discussions? Or is coming in with a point that effectively says "I don't think Microsoft is lying about Windows Phone sales in China" not allowed, or considered to be "promoting and defending" a company with a "billion-dollar advertising and PR budget" merely because I mentioned them.

If you think me pointing out that Windows Phone is "only" outselling iPhone due to some "artificial crippling" of sales due to carrier availability is some sort of "fanboy defence" then I think you're projecting your own prejudices and bias into it. I was merely pointing out possible explanations about why Microsoft was unlikely to be lying.

Either way, it says more about you than it does me. Also, you forgot to log in.

Re:Easy - RIM

[ozmanjusri]

Windows phones probably are outselling iPhones in China because the iPhone still has limited carrier selectivity.

There might be other reasons.

Original samsung i900 8GB/16GB cell phone unlocked Windows 3G 5MP
Price: US $81.00 - 101.00 / piece

http://www.aliexpress.com/product-fm/566727336-original-samsung-i900-8GB-16GB-cell-phone-unlocked-windows-3G-5MP-wholesalers.html.

In lots of 100 or more, you can get them for less than $75. Smaller resellers often package them with a reasonable version of Android pre-installed. I'm guessing they all count as a Windows phone sales.

Re:Easy - RIM

[jo_ham]

You are a sick, foul, disgusting subhuman piece of filth who is paid to lie, slander, and befoul a medium which was designed to be open and free of corporate mouthpieces like yourself. You are a hideous nonhuman. We didn't create the Internet for you to spew your sick, depraved corporate hatespeak. GTFO now.

Goodness me, such vehemence! Clearly something is chafing. I'd address your supposed discussion points, but given that the highest level of intelligence you seem to possess results in the above paragraph, I'm not sure you'd understand them. Come back when you've grown up, son.

You still forgot to log in, or is that a symptom of mashing at the submit button with such frothing rage that someone is wrong on the internet that you need to rush to attack them and thus forget basic things like how to use a discussion board.

Also amusing on "having facts to hand" and "who cares outside of China". I assume you haven't heard of this cool new thing. It's called "Google". You can type things into it and it returns a list of relevant URLs (also called "links" or "website addresses") that you can follow. You can find almost anything really quickly and easily! Maybe you should try it sometime. The website address is http://www.google.com./ Type that into the address bar at the top of your browser window. You don't have to type the http:/// part if you don't want to. Type what you want to find in the search box that comes up and then you too can have facts "close at hand". Well, assuming that your parents haven't blocked Google on your computer. You might have to ask them if it's ok to go there.

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.

Why choose?

[bashibazouk]

Just buy both in a two for one sale!

Re:Why choose?

[KingSkippus]

That would be a really expensive gamble, but one with high potential rewards. Personally, I think you're right. A small- to medium-sized hungry player in the market would probably not think twice about taking such a gamble to make it to the big leagues, but Microsoft is so big, old, and luggish these days that it's in what I call the "protectionist" stage of business operations, which is to minimize risk in lieu of chasing huge payoffs and vastly increasing market share into a segment they're not used to playing in. I doubt they'd even consider such a thing. Too bad too, because it essentially means they will forever be pretty much irrelevant in the mobile market.

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.

Why buy?

[mveloso]

Why buy at all? Not everyone has to be like Apple.

People think this stuff is easy - but Nokia's having issues and it's 150 years old. RIM knew its market too. Why would Microsoft be any different?

Apple makes it look easy, but it isn't. Look at the corpses strewn behind the iPhone, iPod, and iPad and you'll see some of the best companies of the era. And Apple has just started, or so they'd lie you to think.

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!]).

Buy two losers!

[matunos]

Anything to avoid creating a good product themselves, amiright?

Re:there's the Stephen Elop factor

[icebike]

IF windows 8 tanks?

What is this "IF" word? An acronym for Inevitable Future?

Nokia

[CockMonster]

I worked for Nokia when the MS alliance was announced. Elop is ex-MS, he brought in some higher management from MS. The company is already drinking the MS kool-aid internally, the takeover is complete in every way except financially. Nokia shareholders would not object to getting the company out of Finland, it's expensive to hire people there and expensive to fire them. Fortunately for MS a whole lot have already been fired.

Why would an additional purchase help Microsoft?

[SplashMyBandit]

The premise of the article is that by purchasing a smartphone company then Microsoft would gain assets that will help them gain traction in smartphones. This is simply not going to work and a waste of shareholder assets. Microsoft is not gaining traction with their own phone because the ideas they have that work (or worked) for them on the desktop are not desired by customers looking at mobile phones - but they treat the phone very similarly to the desktop (who wants to have Office capabilities on their phone? no-one). Despite Microsoft generating enormous profits they can't get enough new ideas out that customers want. Buying an ailing smartphone company that also does have enough new ideas is hardly going to help them get new ideas that would affect their smartphone market penetration to the tune of their investment.

IMHO Microsoft should be looking at shoring up its desktop rather than fighting Android (Linux!) and Apple on phones. That battle is pretty much lost for them. By focussing on phones Microsoft seem a bit distracted from their core area of desktop - which has allowed Windows 8 to garner very unfavourable reviews. Concentrate on what you are good at Microsoft! By obsessing over growth they are starting to lose focus, making the new desktop experience worse, and rather than maintaining their high profits they are at risk of negative growth - especially if developers decide Anrdoid desktop or OS X are worthwhile targets for their desktop products (as well as smartphone apps), since the people will also follow. Windows 8 is a muddle of ideas and less suited to the existing users than Windows 7 (hint: tablets and desktops shouldn't have the same experience, one is for content consumption and the other for content creation and their needs are different - don't lose sight of this!).

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.

Google should buy them

[khipu]

Google needs a big patent portfolio to beat down Apple and Microsoft; they should buy both Nokia and RIM. Microsoft has done a great job depressing the Nokia stock price. And if Google buys them, they can really kick Windows 8 Phone down, given that Microsoft has bet on Nokia. Oh, and they can fire Elop too.

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.