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2/23/2010
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Ed Hansberry
Ed Hansberry
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Microsoft To Buy Cell Phone Maker?

It has barely been a week since Microsoft formally announced Windows Phone 7 Series, the successor to current Windows Mobile devices. Even though the platform has garnered quite a bit of praise and buzz, an analyst is suggesting that it might not be enough to turn the tide and Microsoft may need to resort to buying another cell phone maker.

It has barely been a week since Microsoft formally announced Windows Phone 7 Series, the successor to current Windows Mobile devices. Even though the platform has garnered quite a bit of praise and buzz, an analyst is suggesting that it might not be enough to turn the tide and Microsoft may need to resort to buying another cell phone maker.This Reuters article suggests that Microsoft needs to by RIM or possibly Nokia to stay in the game. The reason is two-fold. First of all, Windows Mobile is on a downward trend. The Windows Phone 7 announcement won't do anything t bolster WinMo 6.5 sales. Quite the reverse in fact. Unless someone needs a new phone now, they may try and hold off until the holiday season when 7 is supposed to launch.

The second reason is Microsoft, unlike most of its competitors, doesn't make its own devices. RIM, Palm, Apple, Nokia and even Google have their own devices whereas Microsoft relies solely on partners to make phones for them.

If Microsoft wanted to get into the phone making business, they wouldn't have to buy anything though. Google contracts out their branded Nexus phone to HTC. Microsoft doesn't actually make the Zune or XBox 360 either. If they really wanted to make their own hardware, buying HTC makes the most sense as it would be cheaper than buying either Nokia or RIM. In addition, you don't have yet another platform to deal with. Remember, Microsoft purchased Danger which makes the Sidekick. We've not seen much come from that, other than some bad publicity a few months ago when the Danger servers ate user's data.

So the real question is, does Microsoft need to buy another platform to either supplement or replace Windows Phone 7? If so, Nokia isn't the answer. That is an uninteresting platform that is no better position to compete with the iPhone than any of Microsoft's current offerings. RIM is interesting and still the darling to the enterprise customer. However, if the enterprise really interested Microsoft, WinPho 7 wouldn't have targeted the consumer so forcefully. Microsoft is likely keeping WinMo 6.5.x around for a while longer, possibly dubbing it Windows Phone Classic. I suspect that Classic will appeal to the enterprise more than 7 will if for no other reason than there are a lot of different hardware choices whereas 7 basically has the iPhone style form factor.

It makes no sense to me that Microsoft would be interested in an acquisition at this time. The right time would have been in 2008 or 2009 when WinMo was on the decline. They have now put so much effort into WinPho 7 and the release is just a few months away. We'll know in 12-18 months after launch if Microsoft needs to acquire to stay alive or not. For now, I suspect they will hold off.

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