Cisco-RIM talk underscores Microsoft's missed opportunity

Redmond needs more than Windows Phone 7 to compete in smartphone arena

Network World's Jim Duffy ran across an interesting idea being floated in a couple of blogs. Namely, that networking equipment giant Cisco Systems should consider buying Research in Motion, maker of the BlackBerry smartphone. I'll leave most details of the speculation to Jim and The Motley Fool. The bottom line, though, is that if Cisco bought RIM, it could add smartphone functionality to the Flip video camera, which Cisco owns after purchasing its maker, Pure Digital Technologies, for $590 million in 2009. (See also: Wall Street unmoved by Windows Phone 7 hype)

The synergy here is that RIM targets a corporate market with its BlackBerry and that Cisco is an integral part of the enterprise IT world. So the two companies understand each other's customers. But you could say the same about Microsoft, which has a much more "corporate" image than, say, Apple. (Just think of those Apple ads with the cool, laid-back Apple guy and the stiff, Gates-ian Microsoft guy.) I know the Microsoft-RIM rumor has been around for at least a couple of years. I also know Microsoft, after much dithering, has made a decision to take a stand in the smartphone market with Windows Phone 7. That could prove to be a big mistake if, as I suspect, Windows Phone 7 isn't able to make much of a dent in the smartphone market. Seriously, does anyone really believe Windows Phone 7 will overtake Apple, RIM or Google's Android phones for mobile OS marketing share any time in the near future? Why doom yourself to no better than fourth place in a growing industry? If Microsoft owned RIM, however, it would have instant market share and instant credibility in the smartphone arena. Further, RIM's current market cap of $25.7 billion is about one-third of its value back in April 2008. It's a relative bargain now. But Microsoft has chosen a different path, one I think Redmond will regret. We should start finding out early next year.

Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.

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