Microsoft acquiring RIM. It's an idea that rears its head periodically among pundits, but raises too many questions to address easily in real-world terms.
Should Microsoft buy Research In Motion?
That question rears its head periodically, but it's receiving additional focus
after Microsoft CEO Steve Ballmer took the stage during this week's BlackBerry
World conference to announce the latest in a series of partnerships between the
"While Microsoft will support the top phone platforms with
our cloud services," Ballmer told the audience, "we're going to invest uniquely
in the BlackBerry platform in addition to our own Windows Phone platform."
That means Bing will become the "preferred" search and maps
application for BlackBerry, he added, "with regular feature placement and
promotion in the BB App World carousel." Closer to the end of 2011, the two
companies will apparently collaborate to integrate Bing on the BlackBerry
operating-system level, making it a core component of RIM's devices.
Microsoft and RIM are already made a deal to port the
former's cloud services, notably Office 365, onto the Blackberry and the new
PlayBook tablet, with RIM's BlackBerry Servers connecting "cloud to cloud" with
Microsoft's data centers to host Office 365 data on user's servers.
But Microsoft's relationship with RIM isn't unique in its
depth. Microsoft has initiated similarly intensive partnerships with Yahoo and
Nokia, with Bing powering backend search for the former and Windows Phone 7
soon to become the smartphone operating system for the latter.
That's not to say that Microsoft hasn't made a serious run
at a king-sized acquisition before. The company was once willing to pony up
$44.6 billion for Yahoo, before taking a different approach and inking that
10-year deal to backstop the Web portal company's search. The deal allowed
Microsoft to gain many of the benefits of an outright merger at a mere fraction
of the cost.
Microsoft took a similar angle with Nokia, signing a deal in
which it agreed to pay the manufacturer some $1 billion over five years to
manufacture handsets running Windows Phone 7. In exchange, Nokia agreed to pay
Microsoft a licensing fee for every copy of Windows Phone 7 installed on a
So why purchase RIM if Microsoft can ensure via partnerships
that the BlackBerry user base is given full access to its cloud wares?
There's also another complicating factor in any potential
RIM acquisition: Windows Phone 7 itself. Microsoft has devoted enormous
development and marketing resources to launching the smartphone platform.
Indeed, the company concentrated on creating a user interface unique from the
other market leaders, with a consolidation of Web content and applications into
subject-specific "Hubs." In addition, Microsoft has strictly imposed minimum
hardware requirements on its manufacturing partners, who have nonetheless
gotten a little creative with some of the devices and installed extras like
speakers and physical QWERTY keyboards.
With that in mind, what would a Microsoft-RIM acquisition
even look like? Would BlackBerry devices run Windows Phone 7? Would Microsoft
keep the BlackBerry OS, segregating it away from its Windows Phone efforts? How
would the company try to sell an acquisition like that to its shareholders,
after spending so much political capital on insisting that Windows Phone is the
"right" direction? What would happen to the PlayBook?
In other words, the differences between RIM and Microsoft
are so stark, on so many levels, that any outright acquisition would prove not
only expensive (even a radically reduced valuation) but also insanely difficult
from a logistical perspective. The odds are higher that Microsoft will keep to
its partnership strategy, pushing its content via another company's offerings
but not taking the radical step of trying to digest that company
To top it off, the jury's still out as to the possible
benefits. Although Nokia holds a substantial portion of the worldwide phone
market, the question remains whether porting Windows Phone 7 onto its hardware
will translate into significant benefits for Microsoft in terms of
market-share-Nokia has been struggling to hold ground against the likes of
Google Android and Apple's iOS, and its ability to hold even its current
position is by no means assured. RIM has been facing a similar assault on its
user base, and there's no telling whether longtime BlackBerry users would see a
Microsoft acquisition as a betrayal of their brand.
So, should Microsoft buy Research In Motion?
Not unless Ballmer and company like really thorny challenges
with questionable upside.