Microsoft to buy RIM? An epic fiasco in the making

Why are so many people promoting such a clearly awful idea?

If you're reading things on the Internet about the mobile phone market (as I feel compelled to do -- it's a sickness, and also kind of my job), you read plenty of "RIM is in such trouble!" stories, like this one from MobileCruch -- and lately they've started including offhand statements that, oh, Microsoft will swoop in and buy them, probably.

Now, the number of huge multinational tech companies I've run is small, but this strikes me as an obviously terrible idea.

[Also see: Microsoft-RIM partnership prelude to more?]

Less than six months ago, Microsoft launched two smartphone platforms -- Windows Phone 7, with its origin in-house, and the Kin, a creation of the people and technology that came from the company's acquisition of Danger -- and the latter flopped terribly, at the cost of millions of dollars. It was widely viewed as a misstep by Microsoft that took resources away from its effort to catch up in the smartphone market. But the profile for the drama was pretty low, relatively speaking; most people outside the tech press probably never noticed it.

If Microsoft were to buy RIM, it would be huge news -- BlackBerry is more of a household name than Skype, especially among non-techies. But once the regulatory process was worked through and RIM became a Canadian outpost of Redmond, what would Microsoft do with its new division, exactly? Only two possibilities seem realistic:

  1. They could continue selling BlackBerrys and PlayBooks more or less as they stand now, continuing the transition from BlackBerry OS to the QNX-derived OS currently on the PlayBook.

  2. They could move quickly to come out with a new line of BlackBerry-branded (for the time being?) phones and tablets running Windows Phone 7, and, eventually Windows 8.

The problem is that neither of these possibilities seem like particular moneymakers. Option one is the same basic strategy that's been failing for RIM for years now; maybe Microsoft thinks they can manage it better, but it seems insane to pay billions of dollars to oversee an awkward transition from an out-of-date OS to an OS that hasn't proved itself in the market. And even if it works, then you have to maintain two separate mobile OSes, which would preclude any of the economies of scale that there mergers are supposed to create.

In option two, Microsoft only wants the BlackBerry brand, its expertise in manufacturing handsets and tablets, and its sales and distribution networks. It intends to sell the loyal BlackBerry customers new Windows-based phones and tablets. Which leads to the question: How dumb does Microsoft think those customers are? Most of them don't stick with BlackBerry because they're fans of innovative smartphones; they do it because they trust the BlackBerry messaging infrastructure to be secure, and they're not going to be fooled when Microsoft tries to sell them some kind of Exchange backend instead. RIM can't even sell their BlackBerry customers on the PlayBook, largely because it doesn't support email natively. Why should those customers stay loyal during some transition to a Windows platform -- a transition that probably will take upwards of a year?

Microsoft isn't exactly doing gangbusters in the mobile market, but they have a nice little colony in Nokia, headed by an ex-Microsoftie and willing to put WP7 phones out in great volume; that's a relationship that would certainly be destroyed instantly by a RIM purchase before it even has a chance to play out.

Anyway, am I completely misguided? Is there some very good reason for Microsoft to make this buy that I'm missing? Let me know in the comments (though please note that sweeping detail-free statements like "Microsoft needs to make a bold move in the mobile space" do not constitute "good reasons").

ITWorld DealPost: The best in tech deals and discounts.
Shop Tech Products at Amazon