Should Microsoft buy Nokia?

Business Insider makes a case for Redmond to acquire Finnish smartphone maker

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Back in October I blogged about an argument made over at Seeking Alpha that Microsoft should buy BlackBerry maker Research in Motion.

SA contributor Mark Riddix wrote that Microsoft "has no shot at being a major player in the consumer end of the smartphone market on its own."

(Also see: Microsoft-RIM deal might have merit)

I suspect that's true, and so do many others. One of those appears to be Business Insider's Matt Rosoff. But Rosoff thinks Microsoft would do well to consider buying another smartphone manufacturer:

Microsoft should buy its way onto Nokia phones, either through an outright acquisition of the company, or through a major strategic investment along the lines of its 2007 investment into Facebook, which has paid off handsomely.

While acknowledging that "Microsoft traditionally hates the hardware business" and that CEO Steve Ballmer just last summer said Redmond has no major mobile acquisition in the works, Rosoff lays out some reasons why Microsoft should set its sights on the Finnish smartphone manufacturer:

1. There's no money in mobile software.

2. Nokia is the world's top cell phone manufacturer, with 28 percent market share in Q3 and 36 percent market share in smartphones.

3. Apple and Google are invading the enterprise through their smartphones, posing a threat to Microsoft's strongest business.

4. Nokia is more affordable than it was two years ago.

All true, though No. 2 obscures some issues. While Nokia indeed is the top cell phone and smartphone maker in the world, it has been losing market share over the past year to Android and its Symbian OS is old. Last fall the company hired former Microsoft executive Stephen Elop to right the ship. Maybe he's the guy to make the deal work.

My guess is that Microsoft will ill-advisedly try to ride its own Windows Phone 7 to smartphone contention. But with about 3 percent market share, WP7 has a long uphill struggle. Given how fast the mobile computing market is exploding, Microsoft might be better off buying market share instead of trying to grow it.

I hope everyone has an enjoyable New Year's Eve. See you in 2011.

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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