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What Would Microsoft Gain By Buying RIM?


Posted by Eric Zeman, Oct 10, 2008 10:53 AM

A Reuters report suggests that Microsoft would benefit from buying Research In Motion, especially now that the BlackBerry maker's share price has dropped to about $60. Would bringing RIM into the Redmond fold really benefit either company?

The drop in RIM's stock price has people thinking about an acquisition. Canaccord Adams analyst Peter Misek told Reuters, "RIM is a massive strategic fit. I'm fairly certain they have a standing offer to buy them at $50 (a share)."

I have to disagree with Misek. I don't see a strategic fit at all. Microsoft is in the business of licensing its own smartphone platform -- Windows Mobile -- to handset manufacturers. That's its mobile enterprise play. In fact, Microsoft recently reiterated that strategy by saying that the licensing model would remain in effect and it won't give away its software for free.

Android, as we know, is free for handset manufacturers to adopt. In the coming months, Symbian will be a lot cheaper, as well. While other platforms are moving toward an open model, Microsoft is remaining steadfast.

But more than that, Microsoft is not about making hardware, and RIM is. RIM's business model relies not just on providing e-mail servers (which Microsoft does, as well), but on selling smartphones to business users. Michael Gartenberg, analyst with Jupiter Research, said, "Microsoft's Exchange integration with Windows Mobile is excellent so it's not for that technology. Moreover, that would put Microsoft directly into the handset business, the last place it needs to go." Well said.

I also would not want to see RIM's smartphone OS diluted, merged, or otherwise intertwined with Windows Mobile. Not. At. All.

Neither company has commented on the speculation.

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