The Microsoft Acquisition of Nokia is Futile

The 1990s were a lot kinder to Bill Gates and Microsoft than they were to Steve Jobs and Apple. Microsoft was the dominant operating system for home computers and plenty of PC manufacturers were happy to include Windows in their products. In addition, it did not help Apple that its computers looked rather goofy by comparison.

Fast-forward to the present and we now have a situation where Microsoft would like to be more like Apple. The turnaround began in November 2001 when Apple launched the first ever iPod. A further notable point is that the global technology giant also opened its maiden retail store earlier in the year.

These two actions combined to signify the strategic direction that would bring the brand back to prominence: creativity and development.

Apple is the Definition of Cool

Apple has since achieved global success with a variety of product ranges, including MacBook, iPod, iPhone and iPad. Microsoft has been forced to watch as Apple has bloomed to become the definition of cool (the precise aspiration that Steve Jobs held on his return to Apple).

Rather than develop its way to success, Microsoft has instead decided to acquire Nokia’s smartphone division for $7 billion. The gargantuan deal could be concluded in quarter one of 2014 after Nokia shareholders ratify it at a meeting in November.

However, a couple of key industry analysts have suggested that this acquisition was instead driven by Microsoft’s desperation to protect the failing Windows Phone (analyst views expressed via Business Insider).

Spending to Protect the Windows Phone

Within the global telecoms industry, it is no secret that Apple and Android are the dominant players in smartphone operating systems. Microsoft attempted to compete with the legacy of Steve Jobs by partnering with Nokia to develop the Windows Phone. That venture has largely resulted in failure, as supported by the lack of interest from any other smartphone manufacturers.

Money couldn’t help to make the Windows Phone a success the first time around, yet Microsoft is trying to spend its way out of trouble. Industry speculation suggests that Nokia would have stopped making the Windows Phone if the acquisition had not occurred when it did.

The strategy behind the Windows Phone is vintage Microsoft. Apple had no experience in producing mobile phones before the iPhone launch, yet the multinational corporation managed to reinvent the wheel by spawning the birth of the smartphone.

The Failed Acquisitions of Microsoft

Microsoft has a long history of costly acquisitions – most of which you never hear about again – and few of these have panned out. For instance, Microsoft acquired aQuantive in 2007 for $6 billion. Microsoft made the acquisition out of panic when Google purchased DoubleClick. The result: aQuantive lost nearly all of its key leaders and is now largely irrelevant.

Microsoft is not a conglomerate that will generate revolutionary ideas – nor will it take the time to develop them. Barring a miracle, Windows Phone is not going to succeed. Microsoft should have learned from the $6 billion purchase of aQuantive and not upped the ante with the $7 billion acquisition of Nokia.

History Repeats Itself

In summary, Apple has a perceived image that Microsoft will only be able to aspire to. There is a fundamental lack of creativity on the part of Microsoft to develop products like the iPhone and iPad. Even Apple is going to struggle to maintain its own image as it moves further forward without Steve Jobs.

Microsoft would have been better off saving its bankroll by going back to the developmental drawing board. Surely the research and development department has a creative mind or two. This latest acquisition is merely a case of history repeating itself. (Photo credit to MarieMosely)