Should Microsoft buy Nokia? Bad idea, say analysts

As Nokia restructures, Microsoft should sit tight as a partner on Windows Phone, but not as a buyer

By , Computerworld |  IT Management, Microsoft, Nokia

Nokia's announcement Thursday that it plans to cut 10,000 jobs in coming months resurrected speculation that Microsoft should buy the cell phone maker in order to prop up its struggling Windows Phone platform.

Several industry analysts said even with a likely lower purchase price for Nokia, as its stock price has declined over the past year, it would be a bad idea to buy the Espoo, Finland-based phone maker.

"Microsoft would be foolish to buy Nokia, plain and simple," said Jack Gold, an analyst at J. Gold Associates. "This idea of Microsoft buying Nokia comes up each time Nokia has a bad quarter, and some financial analysts think it's a good idea -- no doubt to pump up the Nokia stock a bit."

Gold added, "There really is no advantage to Microsoft owning a device hardware company."

"A software company running a hardware company almost never works out," because of cultural differences between the two work groups, added Rob Enderle, an analyst at Enderle Group.

Analysts also noted that Microsoft needs to work with several hardware vendors to build Windows Phones, and wouldn't want to be seen as exclusive to Nokia by purchasing it, especially with the Windows Phone 8 operating system on the way.

Google recently acquired Motorola Mobility, which makes Android phones, but analysts are watching that purchase closely to see how Google manages its relationships with other Android hardware makers, especially Samsung, the global Android leader.

"We'll see how the purchase goes with Google and Motorola, but I'm doubting that will work out," Enderle said.

The biggest reason it is difficult for software and hardware companies to work together is because of cultural differences and work styles of hardware engineers compared to software engineers, Enderle said. Microsoft bought both WebTV and Danger, maker of the Sidekick, and both ventures failed, he said.

"If you add the size of Nokia, the physical distance from Redmond [home of Microsoft in Washington state], and the cultural differences, it would be incredibly difficult to do this and not destroy Nokia in the process," Enderle said.


Originally published on Computerworld |  Click here to read the original story.
Join us:
Facebook

Twitter

Pinterest

Tumblr

LinkedIn

Google+

Ask a Question