That Sour Berry !!

These are troubled times in world economy. Bailout packages by governments across the world have failed to improve the macro sentiments overall. Its strange to believe how a bull economy can turn bearish in a matter of days wiping out some of the hallowed financial institutions of our times on its way. So is it the turn of Socialism again? No I am not attempting to answer this tricky question - I'd rather attempt to dwell on something more comfortable. Although the effects of economic slowdown have had limited effects on telecoms scenario, a prolonged recession can effect operators' growth plans. But as someone rightly said every situation is an opportunity. Valuations of many companies have tanked owing to free fall in stock markets and these are ideal times for some one sitting on excess cash (now is that as rare as a blue moon in these crazy times?). One of those who always seem to have that is Microsoft and with rumours of interest in Research in Motion - the makers of Blackberry, reemerging, the fight for market share in the Mobile OS is set to become all the more interesting.

With competition from Nokia's Symbian, Apple’s iPhone and most importantly, the Google Android platform, Microsoft’s mobile platform is facing its toughest environment yet. Recently it was revealed that the upcoming version of Microsoft’s mobile OS, Windows Mobile 7.0, would be delayed and will now release as late as 2010. The updated version, which the company’s partners had been hoping to have by early 2009, was aimed at giving Microsoft a bigger presence on the mobile stage. Although Nokia with its dominance in the handset is helping Symbian's cause and iPhone with its touch sensitive features is continuiung to wow customers worldwide, its the entry of Google's Android platform that has got Microsoft worried - with T Mobile's announcement that it has close to 1.5 million preorders for G1 adding to its worries. Over the years, Microsoft has pummeled countless rivals, including the heavyweights like I.B.M, Netscape etc. But it has never faced a rival as formidable as Google. Though, Microsoft is currently enjoying increased penetration levels thanks to the classic "first mover advantage" principle, Google appears to be much more superior in speed & smartness and seems to understand customers need better. Having exhausted the best of its ideas on how to deal with Google, it has realized the best way to compete with innovation is not to recreate innovation but to buy it. The same was true when it tried to buy Yahoo through a series of hostile bids earlier this year, the same was true for the Facebook investment, and the same is also true when it is trying to buy its way into dominance in the Mobile OS space through its apparent interest in Research In Motion - the makers of Blackberry.

Although there were rumours in the second half of last year about a possible buyout, with plummetting stock prices, new rumours are swirling that Microsoft which is much more comfortable with the valuations now and may test RIM's resolve by placing a bid close to current market price. Regardless of the authenticity of market talk, one must question the business sense behind the interest. Although this does possess some obvious advantages to both the companies - like providing Windows Mobile which has a sizeable consumer presence, a headway into enterprise customer base for its exchange & other business offerings and Blackberry with some much needed "touch screen" presence, but buying a company that makes hardware which doesnt run Windows Mobile pose many potential operational challenges. Also Blackberry supports multiple Email platforms and one has to doubt how interested will Microsoft be to support Lotus offerings on Mobile. Built on Linux platform, Blackberry is not strategic fit for Microsoft's Windows strategy for Mobile OS.

At the moment, there are too many complications for the deal to go through. Both companies can do much more individually than as an integrated unit. The acquisition might have made more sense about 5 years ago when Blackberry was smaller & less prevalent. Platform integration would have been a much easier task then. One does hope this rumour remains just that - a rumour not just to sustain the healthy growth in the Mobile OS industry but also because the industry is not ready for consolidation yet.