BusinessWeek: Microsoft may need an acquisition to avoid losing out in smartphone market

Apple Online Store “Just a few years ago, Microsoft looked like a real contender in the mobile-phone market. Its Windows Mobile operating system ran about a quarter of all smartphones as recently as 2004, and it was gaining ground on leaders like Nokia,” Cliff Edwards and Olga Kharif report for BusinessWeek. “Then Apple and BlackBerry maker Research In Motion left the software giant in the dust.”

MacDailyNews Take: That RIM, with its antiquated BlackBerry OS, hopelessly outclassed by Apple’s iPhone OS, left Microsoft in the dust, shows how bad the situation is for lumbering Redmond.

Edwards and Kharif continue, “On Feb. 15, at a wireless industry conference in Barcelona, Microsoft will unveil its latest effort to get back into the game. The renamed Windows Phone operating system will ‘move the bar forward, not in an evolutionary way,’ promises Robert J. Bach, president of the company’s entertainment and devices division.”

MacDailyNews Take: Forgive us for not believing Microsoft when they promise anything, but especially when they vow to “move the bar forward.” We’ve heard it often, but never seen it, so confidence is low.

Edwards and Kharif continue, “Microsoft’s new software is much improved and has the advantage of easily handling word processing and spreadsheets sent from PCs. It will also be more integrated with the company’s Xbox game machine and Zune music player, so users can share music and videos among Microsoft devices. But that won’t solve another challenge the company faces in attracting customers. Independent software developers who create new applications for mobile phones have mostly ignored Microsoft and focused instead on the iPhone and Google-backed Android phones. Developers have cooked up more than 140,000 apps for the iPhone, available through Apple’s iTunes. There are about 800 available in Microsoft’s online mobile store, though the company estimates 20,000 applications will run on its mobile operating system.”

“Some industry analysts say the Redmond (Wash.)-based company should dramatically change course. It could opt to brand its own phone, like Google did, or strike a strategic partnership with a power player like Nokia. Several think it should make a major acquisition. “The logical thing for them to do would be to buy someone,” says Richard Doherty, co-founder of consultancy Envisioneering,” Edwards and Kharif report. “The most affordable choice would be Palm.”

MacDailyNews Take: Palm’s plan all along, as we’ve always said.

Edwards and Kharif continue, “But Microsoft CEO Steve Ballmer has said he’s not interested, sources within the company say. ‘[Palm’s] brand equity isn’t what it once was,’ says one Microsoft executive who works on mobile initiatives.”

MacDailyNews Take: The hits just keep on coming! May Steve Ballmer remain Microsoft’s CEO for as long as it takes!

Edwards and Kharif continue, “Richard Doherty, co-founder of consultancy Envisioneering, says another possible target is Waterloo (Ont.)-based RIM… [But] the Microsoft source, who requested anonymity because he is not authorized to speak to the press, says the company is not currently considering a RIM acquisition and is focused on its own internal efforts.”

Full article here.

MacDailyNews Take: The day Steve Jobs unveiled the iPhone, Microsoft didn’t know what hit them and, from the sound of it, they still haven’t figured it out. As they dither, time keeps on slippin’, slippin’, slippin’ into the future.


  1. They already bought the Sidekick and its team.

    I remember in the Summer of 2008, the guy who runs the WinMo division said they wanted to double their smartphone share from 20% to 40% by 2010.

    The reality is, they have gone the other way with less than 10% now.

  2. Hey, don’t count Microsoft out yet! There are a big company backed by IT managers, a lot of talent, and a lot of money.

    All they need is for management to plan out a roadmap, drive their innovation hard, and let their inspired engineers design . . .

    oh, who am I kidding.

  3. ‘[Palm’s] brand equity isn’t what it once was,’ says one Microsoft executive who works on mobile initiatives.”

    Funny; neither is Microsoft’s…

    Gotta love MS — brimming with hubris and arrogance no matter the time of day.

  4. RIMM currently has a market cap of close to $40 Billion. Microsoft just doesn’t have that kind of cash, even without an acquisition premium. Palm is at least digestible, though putting two losers together doesn’t make a winner.

  5. Wow… no mention whatsoever of either Danger or the Sidekick. You’d think this article would at least *mention* the fact that MS has already gone down the acquisition road, and they have absolutely nothing to show for it now.

    And it’s doubtful that Danger/Sidekick will be part of whatever “big announcements” MS has in store for Monday, since they’re not a part of the monopoly tech (Office) MS is attempting to leverage, to force their me-too efforts into a marketplace which doesn’t really need them.

  6. I have been thinking, “what would I do” if I were granted the power to advise Microsoft at the top levels. And my M$ loathing aside, I think it is an interesting question.

    Of course, there is a huge list of obvious “don’ts”, like get ride of the Zune, the BAT, the Balmer. But really, I struggle to come up with directions for that company that make any sense at all – beside of course, shut the doors and give the shareholders back the money.

    Maybe focus on .NET and the Enterprise App Dev market. Make their stuff run on Unix/Linux. Keep XBox but get Microsoft off the label all together. Make the Next IE WebKit based and new from the ground up with a simple UI that keeps some of the classic look so grandma can still use it. Fix exchange. Fix office to use an open standard across the board.

    I mean Bill Gates gave a bunch of money to charity (guess he is scared of the pearly gates or summin). Why not have MS start to fix up their shi##y corner of the Internet for the poor folks that still live there.

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