Microsoft + Nokia = HP + Palm

Microsoft buying Nokia is a desperate play at mobile computing.

Unfortunately, the purchase doesn't add up  in terms of common business sense. 

Remember, in 2010, when HP bought Palm for $1.2B?

Palm once held 70% of the smartphone market to fall to only 4.9% share at the time that HP bought it and committed to "double down on WebOS."

Now, fast forward to 2013 and Microsoft is buying Nokia for $7.2B, with a mobile software market share of about 4% combined (compared to their prior Windows desktop operating system market share of over 90%) and ZDNet reporting that it was "double down or quit."

When HP bought Palm, it was a hardware maker buying software; now with Microsoft buying Nokia, it is the software maker buying the hardware vendor.

But in both cases, it's the same losing proposition. 

In 2010, at the time that HP bought Palm, Stephen Elop was leaving Microsoft to become CEO of Nokia (and in 2011 Nokia made the deal for a "strategic partnership" with Microsoft).

Now in 2013, when Microsoft is buying Nokia, HP has thrown in the towel and just sold off the remnants of Palm O/S to LG Electronics.

Ballmer is right that Apple and Google do not have a permanent monopoly on mobile computing, but purchasing Nokia is not the answer. 

Microsoft's stock is down more than 5% on the day of the merger announcement...and there is more pain to come from this acquisition and Microsoft's hubris. 

Buy more outdated technology, and you've bought nothing, but change the culture to innovate, design, and integrate, and you've changed your organization's fortunes. ;-)

(Source Photo: Andy Blumenthal)

Microsoft + Nokia = HP + Palm

Nokia and Microsoft, Desperate Bedfellows

A couple of hours ago, Nokia's debt was downgraded by Moody's to Junk!

Nokia was once the world largest vendor for mobile phones with almost 130,000 employees, but since the iPhone and Android, they have since fallen on hard times--who would've thought?

Just 16 months ago, in February 2011, Nokia announced a strategic partnership with Microsoft to try and stem their losses by adopting Windows Mobile, but this was like a drowning victim grabbing on to whoever is nearby to try and save themselves but only ends up in a double drowning.

No, Microsoft is not drowning exactly, but their stock has been more or less flat from a decade ago and one of the worst large-tech stock performers for the last ten years!

Will the acquisition of Yammer for $1.2 billion this week change this trend--I doubt it. 

Between Yammer for social networking and the acquisition of Skype for video-calling last year (May 2011) for yet another $8.5 billion, Microsoft is trying to fill some of it's big holes in its technology portfolio, just like Nokia was trying to fill it's gaping hole in mobile operating systems by partnering with Microsoft.

Unfortunately both Microsoft and Nokia have essentially missed the boat on the mobile revolution and the sentiment is flat to negative on their long-term prospects.

So the shidduch (match) of Nokia and Microsoft seems like just another case of misery loves company.

Desperation makes for lonely bedfellows, and thus the announcement this week by Nokia that they are going to layoff 10,000 and close 3 plants by end of 2013 was really no surprise. 

Aside from the short-term stock pop from the news of the acquisition, what do you think is going to be in the cards for Microsoft if they don't get their own innovative juices back in flow? 

Can you just acquire innovation or at some point do you need to be that innovative company yourself once again?

Rhetorical question. 

Hopefully for Microsoft they can get their mojo back on--meaning rediscover their own innovative talents from within and not just try to acquire from without.

(Source Photo: here with attribution to Kidmissile)

Nokia and Microsoft, Desperate Bedfellows