image source: tech2.com
Not too long ago, I wrote a blog post regarding my belief that Microsoft should acquire Nokia, and sure enough, about six months later it happened. Although I can’t speak for Microsoft's final motives (and I can’t say that I definitively predicted the cause) I was of the "an-acquisition-is-genius" opinion because of the apparent fragmentation issue that Microsoft is having with its products and I am citing this as a primary reason why Microsoft continues to trail in the mobile market. A major drawback of the Microsoft name right now is that they have too many products out (this is, at least in part, a result of the antitrust break-up that occurred in the company several years ago - Microsoft never really recovered from that). From where I sit, it seems that the corporate structure of Microsoft is creating an environment where many of the development projects aren’t talking to each other. The result is that Microsoft is producing a lot of half-assed products and services, many of which are being cancelled, or the names changed which ultimately just creates further confusion. Microsoft truly needs to simplify and unify its fragmented branding and when I wrote my last blog, I felt that bringing Nokia in-house would provide them with the hardware patents, structure and manpower they needed to really get a good grip on their first party hardware. Once Microsoft gets a grip on their hardware and operating system, it should be easy to simplify the software branding and bring everything under control.
So, in short, I truly believe that acquiring Nokia was the
right move for Microsoft.
Now as we know the announcement to buy up Nokia came on the
heels of another announcement – Ballmer is on his way out, and Microsoft is
left with the challenge of finding a new CEO in the wake of what is already a
large shake-up in the form of the acquisition. A lot of investors are concerned
with this ordeal as a whole– why? Well, most CEO’s don’t want to take a
company over that already has the next two years planned out and stockholders
are therefore concerned about whom may be currently under consideration by the
board. Many CEO’s want to change things – after all, that’s what corporate
executives do best, right? Why else would every operating system ever look
completely different from its previous iteration? Ballmer has already done all of the hard work, like acquire Nokia and reorganize the company, removing the former stack ranking system that is cited as a primary cause for development fragmentation in the company.
Ahem, let me get back on track. Here’s the point of this
blog: I don’t think the next two years are as cut and dry as people are making
it. My point in mapping out everything I did above is to illustrate one fact:
The Nokia acquisition was a move to strengthen only one part of their business:
first party consumer hardware. Right now Microsoft is currently trying very
hard to make a name for itself in the consumer market again (primarily by
taking on an Apple-like model and producing all of their hardware in-house) and
we have all been focusing on that as analysts, but I feel Microsoft’s strategy is
much deeper than that and if we all take a step back for a second, this is
quite clear. Looking at the broader strategy of Microsoft may also reveal that
the job of the upcoming CEO may not be as pre-planned as we are leading
ourselves to believe.
Back in the day before Apple really began to pose some
competition, Microsoft made a name for itself in the consumer market in a way
that was different from other companies: they cornered the consumer market by first
being the number one business system. Microsoft was able to overshadow Apple in
the business world for a few simple reasons: Microsoft products were (and still
are) less expensive, easier to maintain, and more versatile than the products
of other competing companies. Building on the foundation of these basic
principles, Microsoft plowed ahead in the business market and then moved into
the consumer market as almost a secondary business.
The question here is this: despite the overwhelming presence
in business why did people buy Microsoft products for their homes?
The answer is actually more simple than you think: No one
wants to learn two systems.
If a person uses a certain system at work (in this case,
Windows), they want to come home and use the same thing, because people simply don’t
like to do more work, and incompatibilities between the two systems and the
usage differences end up causing a major inconsistency when you’re trying to
easily sync your information across device and work efficiently. All in all,
what this means is that although Mac devices might be better for home use, learning
two different systems and having to make continuous conversions to transfer
data is just something that people don’t want to do. Switching back and forth
between a PC and a Mac is like going back and forth between driving a Honda and
a plane, and I truly believe that Microsoft recognized this when initially
breaking into the consumer market.
In short, Microsoft has always known that a major key to
dominating the consumer market is to be the overwhelming presence in the business
market.
…Okay, so how does this all tie in to the title of the blog?
Microsoft has been able to make leaps and bounds in its
consumer electronics and software over the past few years, but it’s hurting. We
all know that the Microsoft systems haven’t lived up to analyst
expectations - so what is Microsoft to
do?
Buy Blackberry.
Acquiring Blackberry could seriously change the game for
Microsoft. Blackberry is known for two things: business-friendliness and
security. If Microsoft were to get it’s hands on the patents that Blackberry
holds and implemented the security features available on those devices into
existing windows phones, matched with the physical integrity/build quality of
Nokia devices and perhaps a well-timed release of Windows Phone Nine, well, we
could suddenly have one very, very serious mobile contender.
A "WinKiaBerry" could function with the integration of a Microsoft
product (for active directory and email, vpn, etc.) the security of a
blackberry device, the software of Microsoft (including office) and the strong,
long-lasting quality of a Nokia device. Something like that would dominate the
business and IT marketplace and re-affirm Microsoft’s position in the business
market, thereby keeping them in the game for the consumer market, and buying
them time to stabilize their new “first party” approach.
In my humble opinion, Microsoft purchasing Blackberry would
be a smart move, and if we see something like this happen then the next CEO
would have a lot of changes on his plate. This could ultimately quell investor
worries and perhaps even move the stocks up quite a bit – besides, Blackberry
is still hurting pretty badly, especially as the new Blackberry 10 system’s “newness”
luster begins to fade and the stocks continue to fall.
So in the end, I see Microsoft running with this Nokia deal
in their consumer market while working on an acquisition deal with Blackberry
and ultimately setting themselves up to make a strong run at the mobile IT
market – a market still in churns as BYOD reigns in the wake of a good
successor to Blackberry.
An opportunity like that is almost too good to pass up.
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