Microsoft may still buy RIM?

February 23, 2010 | By Surur

Even the well-received announcement of Windows Phone 7 has not caused rumours of a RIM buy-out by Microsoft to die.

"It’s something I know they’ve talked about — buying Research in Motion or even Nokia," Toan Tran, an analyst at Morningstar, said of Microsoft. "To really compete in this business, Microsoft needs to get into the hardware business, where they are able to control the entire user experience."

"Apple has shown that’s the model that works," Tran added. "In a consumer device, people just want something that works, they don’t want something as complicated as a PC."

Microsoft has about $35 billion in cash and short term investments and a market cap of around $248 billion, making RIM’s $39 billion market cap pricy but affordable.

Microsoft has always resisted competing with their OEM’s, but as traditional Windows Mobile OEM’s stray to other OS’s this may become less of an issue.

The new consumer focus of Windows Phone 7 series may also be a sign of Microsoft abandoning the Windows Mobile business market, leaving the company in need of another route into the enterprise market.

Chief Executive Steve Ballmer has however pooh-poohed the idea:

"The word ‘ever’ is a big word, but I certainly don’t feel like that’s the right strategy for us today," Ballmer told Reuters at Mobile World Congress recently.

"Buying somebody would be a shortcut," said Kim Caughey, an analyst at Fort Pitt Capital Group. "But if they can give business users more functionality (with the new phones), they have a shot."

Morgan Keegan analyst Tavis McCourt said he did not believe Microsoft has yet given up on its software licensing strategy:

"Microsoft doesn’t want to be in the hardware space. It would alienate its other hardware customers," said McCourt.

Do our readers believe the rumours of a RIM purchase is credible? Let us know in the comments.

Source: Reuters.com

About Surur

Site Admin and Windows Phone enthusiast, he has been using Windows Mobile devices since before they were called PocketPC’s. He is currently sporting a HTC 7 Trophy.

Tagged RIM, rumours, windows phone 7

Ganondolf

when wm6.5 was around it seemed to me to be a good idea to buy palm and combine there webos os with wm6.5 to make a more user friendly and fancy ui on top of the functions of wm6.5. but now they have made wm7 from scratch i dont think they need webos which is not as good as wm7 in functions or ui. as far as hardware is concerned, they could use palm as a brand of microsofts own made phones (hardware) but i think it would be easier and cheaper for ms to just make there own hardware from scratch like they have done with the xbox and zune.
Jos Dewey

Yeah, but RIM and start making your iPhone clone Microsoft! That's all we've been waiting for all these years, an iPhone with a Microsoft logo on it.

Seriously, these analysts and mainstream news media do not understand technology, and view everything from the viewpoint that Apple has taught them. After all the locking down and limiting Microsoft has already proposed with WP7, why the heck do they also need to push off all their hardware partners and start making the hardware too?

See what I mean? We haven't seen WP7 yet, and by all accounts it seems like Microsoft has attempted to create a bit of a closed ecosystem like Apple, short of limiting the hardware as well. So why would someone like Reuters think Microsoft needs to lock down the hardware as well to compete? Oh yeah, because that's how Apple found success.

Microsoft has already locked down the hardware a bit, setting pretty stringent requirements for companies like HTC, Samsung and LG to follow. They do not need to eliminate those paretnerships and start offering their own hardware, and therefore they don't need to buy RIM.

Seriously, I despise these analysts… if they understood technology then they would be in technology, they wouldn't be sitting in some depressing cubicle farm trying to gauge market trends to make the rich even richer. And they don't even understand the market or economy that well it seems. "Apple is selling lots of iPhones, so the only way for any smartphone to succeed is to copy Apple in every possible way!"

I like how people always have to attribute Apple's success to making good products… then why can't Microsoft Windows' success in being the OS of 95% of computers be because it's a great product? People, especially these apparently knowledgeable analysts, are too quick to ignore Apple's marketing. Marketing which isn't limited to incessant holier-than-thou commercials and ads, but also this whole unhealthy promotion of Apple being infallible which makes people come back and only buy their products.
John H

I like this move as I see it as a potential way for MS to control the enterprise space. Frankly, I think the Exchange experience on a smartphone is superior to Blackberry's (I am a long time WM user that recently migrated to Android). A potential acquisition eliminates a major competitor in (and unifies). Then along come the consumer friendly WP7 experience, and Microsoft is back as a material player in the white hot smartphone market.
Paul

MS would only compete against OEMs as a last resort. They believe the one OS/multiple hardware model will win. So buying RIM gains them nothing. They also can't really afford it anymore. SteveB would be toast if he tried.
jeffg

makes no sense.
maybe prior the WP7S release, how on earth can they ask OEM to follow their new WP7S strategy – which is a great and improved one – while they have RIM on the other hand? its basically impossible.
It might have made sense but not now, not with what they now have with wp7s especially when they haven't even hit the market yet and seen if it a success or failure.
brian

It won't happen unless RIM starts to bleed like Palm. Which may happen if RIM doesn't do a reboot of their OS like MS.
http://intensedebate.com/people/Lennard Lennard

I don't think it would be wise to buy RIM, not at that hefty price anyway. what really would Microsoft be paying 40B dollars for? to get in the hardware business? Microsoft had already acquired danger so they can do their own hardware if they like without owning anybody anything. spend $40B on RIMs customer base? I don't think it's worth that much money. what about the return on investment after buying RIM? the roi seems none existent to me or very minimal

in the last 12 months RIMM made $2.27B in profits from $14.4B…..which is little over half a billion in profits everyquarter. it would take Microsoft 17 years!! to make back the $40B they paid for RIM
buying RIM is not a good idea, it would be a waist of Microsoft's recourses
http://intensedebate.com/people/Lennard Lennard

I thought RIM did the reboot with the Storm…..
http://intensedebate.com/people/NathanV Nathan V

Why buy a company that's so heavily invested in an alternate OS? They'd be better served buying a company that does hardware only, like HTC.
http://intensedebate.com/people/djguapo djguapo

Palm should be the target, they're the vulnerable ones right now.
http://intensedebate.com/people/chinch chinch

^ Palm is worthless to Microsoft today. Their Windows Phone 7 reboot – 18 months in the making now – is proof enough.

RIM is a complete and total waste of Microsoft resources as well. It also has probably peaked in terms of "soccer mom" & casuals purchasing once Android wrinkles are ironed out and Windows Phone 7 ships (even if iPhone remains on ATT only). Windows Mobile for the past few years does anything Blackberry does for corporate users and then some.

Do people/analysts really expect CORPORATE mobile phone use to increase? LOL… they've been using mobile phones for years now. Growth is in the casual market (iPhone-like audience) use of smartphones.

I can see why analysts (who don't really see big picture) would speculate but such a "strategy" to purchase RIM would at best be several years away depending on how it's Windows Phone reboot went. The closest example would be when MS launched Bing while flirting with Yahoo. MS didn't buy Yahoo, let it devalue itself significantly – then took Search it's only useful feature for pennies on the dollar).

RIM will take a big hit from Windows Phone 7 and for better or worse Palm is already on borrowed time. The urgency for Microsoft to buy ANYTHING is simply not there, nor is it remotely sensible at this time. MS needs to simply finish Windows Phone 7 and finish integrating it's Windows Live, Mesh/Cloud and xbox game services in 2010 and 2011.
http://intensedebate.com/people/Northerngeek Northerngeek

There's only one way I can see buying RIM working- if Microsoft were to buy them solely to make a WM7 phone that is focused on business and nothing else. $40B may be a lot of cash but the way the market is set to expand I could see it paying out within 7-10 years. Although if MS were to buy in a year who knows what their market cap would be?

Like others have said I would be sceptical about any such deal but having said that my girlfriend, best friend, ex girlfriend and mother have all purchased Blackberrys in the last year and are all addicted. Perhaps RIM is in a good position to stay strong in the market.
anonymous-x

Who am I? I'm a PC, Windows that is, to provide support I think Windows should expand regarding -buy Palm, buy RIM, put them all together & what have you got? Power. It may be 6.5.3 with many ROM's to grab, the HD2 is King, Android will die.