Every time Research In Motion’s stock drops a few points, somebody chimes in about how Microsoft should buy RIM.Here’s why Microsoft SHOULD NOT buy RIM:
- RIM’s market share has been collapsing for some time. Now, absolute number of shipments are declining. Why buy a platform that’s already fading away on its own?
- Hardware has lower margins than software and Microsoft has typically avoided big hardware bets. (The Xbox was an exception because it’s fundamentally a software and services business. Companies make money selling games, but they have to absorb big losses on hardware up front to get the platform established. A partner would never be willing to do this for Microsoft.)
- Microsoft already has a dedicated hardware partner for its own Windows Phone software — Nokia, the biggest phone maker in the world. (Although it’s no longer the biggest SMARTPHONE maker in the world — Apple passed it last quarter.) Buying RIM could damage that relationship.
- RIM’s software strategy is completely incompatible with Windows Phone 7. It would take Microsoft at least a year to get RIM on track to ship Windows Phones. (Just like Nokia won’t start shipping Windows Phones in bulk until 2012, a year after it signed with Microsoft.)
- The next version of Windows Phone 7 is actually good — if Microsoft can just get retail support, it has a chance.
- RIM’s only real strength is its enterprise business — the ability to connect to corporate email servers (particularly Microsoft Exchange) and loyalty from IT departments. Microsoft makes Exchange, Windows Phone does a great job of syncing with Exchange, and Microsoft is already a very strong presence in corporate IT departments.
- Unlike Google, which needed Motorola’s patents, Microsoft doesn’t need RIM’s patents — it already has enough patents to extract licensing fees from Android resellers and to defend itself against almost any other big patent holder.
- Integrating RIM’s 17,000 employees would be a big chore.
Microsoft seems to think it’s a bad idea, too.
A source with knowledge of Microsoft’s acquisition strategy told us several weeks ago Microsoft isn’t interested in buying a smartphone maker and getting into the hardware business.
Another person who worked on the Microsoft-Nokia deal told us last week that he thought there was no chance of Microsoft buying RIM now — it would rather wait until RIM is really in dire straits, then pick up its patents or selected assets like the Blackberry Enterprise Server business.
Microsoft certainly has the money to spend. But it seems like there are better places to spend it.
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