Microsoft Might Eventually Purchase Nokia in 2012
To fully survive in mobile industry, Microsoft may need to have more control on hardware or else Windows Phone may eventually be beaten by both Android and iOS. Nokia is an obvious choice for acquisition as the Finnish company is now integrating Windows Phone OS to its latest devices. Despite the dwindling market share, Nokia is still the top phone manufacturer. Experts believe that the absolute cost is relatively low, at about $21 billion if the acquisition performed is at about $7.5 per share (50% premium). This is perfectly within Microsoft’s financial reach as the software giant hoards about $55 billion of cash. Google purchased Motorola Mobility for $12.5 with a somewhat worse competitive position.
Microsoft has another alternative on table, the Research in Motion. But it means, Microsoft needs to ditch RIM’s distinctive platform, the BlackBerry OS, which is slightly harder to do, because Nokia is already in a steady process of abandoning Symbian. RIM is much cheaper at about $10.8 billion, but it would take more effort to integrate Microsoft’s technology. Given Nokia’s more favorable characteristics, it won’t be too far-fetched to expect Microsoft bids for Nokia somewhere next year.
If Microsoft successfully acquires Nokia, it would be on par with Apple’s position. Both start from the personal computing industry and they have software/hardware integration in the mobile industry. Nokia is well known for its innovative phone design, while Microsoft Phone 7.5 was praised by analysts as an intuitive and elegant mobile platform. It would be interesting to see whether Microsoft has the ability to survive in the highly competitive smartphone industry.