Microsoft And Nokia: Deal Or No Deal?

In the wake of Google’s bid for Motorola, there are rumors making rounds about Microsoft snapping up Nokia. According to a press release at the Microsoft website dated February 11, 2011, the technology giant and Cell Phone Company were looking forward to announce plans for a broad strategic partnership.

But, what happened then? Recent reports disclose that Microsoft decided to reconsider its plans because it wasn’t thrilled by Nokia’s balance sheets. Share prices of the once champion of cell phone industry have dropped nearly 40% in the last three months. And it’s not hard to figure out why?

The Smartphone market has expanded like wildfire with Apple and Google dictating the new terms of mobile technology with their operating systems. Realizing that without a proper hardware its growth and survival in the Smartphone industry won’t last forever, Google bought Motorola Mobility. So what should Microsoft do in order to establish and maintain its presence in a market that has shifted from PC hardware to smartphones?

_{Image from: Digital Trends}

Why Microsoft Should Go For Nokia

A very simple reason to start from, Microsoft should make a bid for Nokia to prevent someone else from buying it. In the last five years, Nokia has seen its shares plummet 90% to $2.91. With Nokia burning through cash, it is definitely a feasible investment or buying option for Microsoft. Moreover if any other company stepped in the equation, they will definitely undo the Windows Phone 7 deal, something which will be a devastating blow for Microsoft.

Secondly, despite being a company going through a rough phase Nokia still sells millions of handsets particularly in developing countries. This can provide Microsoft the necessary technological platform it requires for establishing a strong foothold in capturing its share in mobile ecosystem.

Nokia is Microsoft’s preferred technology on the Windows Phone. If in times to come Nokia’s financial performance deteriorated, it would be a massive blow for Microsoft; hence a more economically safer option is to acquire some or all of Nokia and restructure its mobile technology designs in a way so that it bears resemblance to the ones already being used by Apple and Google. Along with all this the convenience of cross-licensing also makes each as lawsuit-proof as you can in the current patent-crazed world.

With all these conveniences at disposal Microsoft would only provide its competitors the opportunity to capitalize on its laziness which would definitely not be positive for its dream of capturing the mobile ecosystem.