Why Microsoft should buy RIM
Three years ago, in my annual prediction list, I said that Microsoft would buy RIM. However, I also stated that this was a very wild prediction that I doubted would happen.
Last week, All Things D wrote a piece that said Microsoft and Nokia had discussed jointly buying RIM but that the talks did not go anywhere.
But if you think about it, Microsoft owning RIM, especially their customer base, makes a great deal of sense. At the moment, Microsoft’s Windows Phone is basically designed for the consumer market and has little traction in corporate offices. In fact, Apple’s iPhone is eating Windows and RIM’s lunch in smartphone enterprise deployments. And while Google and their partners who have Android smart phones are taking aim at the enterprise, their acceptance in this market has been weak up to now.
But RIM’s assets still carry significant value in the enterprise. From their secure servers to their BBM messaging service, RIM still has serious technology that draws great interest from the corporate set. But, RIM is at a major junction in their history. If they are to have any chance of growing their business, they must move their customer base from its existing Blackberry OS to one that is much more powerful and will meet the needs of their business users as smartphones get smarter. To that end, they bought QNX and are planning to migrate to this smartphone OS by sometime in 2012. But here is the rub for them. Besides being very late to the market and having only a minor ecosystem of apps and services to work with now, the investment needed to get software developers to write apps for QNX will be very steep. And given the fact that developers are already backing iOS, Android and Windows Phone 7, it will be a tough sell as well.
In the mean time, Apple’s iOS and Android’s ecosystem that targets the enterprise is rising fast. And even though most of the apps written for Microsoft’s Windows Phone are consumer based, Microsoft too has their eyes on the corporate market.
In my viewpoint, the chance that RIM can be successful with their strategy, given their lateness in providing a powerful smartphone OS for their business users and what it would take to get software developers to back it is marginal at best. And although their market value has taken a big hit over the last three quarters, I doubt that it will recover given the difficult position they are in considering the current competitive smartphone climate.
Consequently, this is a perfect time for Microsoft to make a serious attempt at buying RIM and use this to jumpstart their enterprise smartphone business. Interestingly, the idea of Microsoft using RIM to counter Apple’s iPhone move into the business market was at the heart of my wild prediction 3 years ago.
While RIM has been trying to move QNX into their business smartphones and getting software developers to support it with minimal success to date, Microsoft could instead move very quickly to marry their Windows Phone 7 architecture to replace RIM’s QNX. Then they tell their current Windows Phone 7 software developers that it is now time to begin writing powerful business apps for this smartphone platform. I say quickly but I realize this would take some serious software engineering to make this happen. However, Microsoft’s smartphone OS is very stable and already has strong developer support and a move like this could make Microsoft a serious player in enterprise smartphones almost overnight.
So, will this happen? Probably not. RIM’s management seems determined to try to save the company with QNX and hoping to get developers to support them. Good luck to them but in my view, that ship has passed.
But it sure would be interesting if Microsoft did buy RIM and tap into their loyal customer base and over time move all of them to Widows Phone 7. In fact, it may be their only hope of gaining any ground on Apple in the enterprise and keeping Android at-bay in business as well. And while it would be risky, the upside of owning RIM’s customer base and transitioning them WW to Windows Phone could be huge. I am sure that is what Microsoft and Nokia were thinking about when they discussed this idea recently.
But given RIM’s managements current position, it seems likely that this will never happen, even though it would be best thing for both of them.