Will Microsoft zune smart phone makers?

zune by robertnelson

Microsoft looking at buying Nokia, RIM, or even Palm?
[Via MacDailyNews]

“The new Windows phone software is a big improvement on its predecessor but may not be enough to reverse market share losses, and Microsoft Corp may have to eventually buy a Nokia or BlackBerry maker RIM to get back into the game,” Bill Rigby reports for Reuters.


Microsoft has done such a great job selling other hardware systems. </snark>? Not if the object of a business is to make money. Xbox is probably their most popular piece of hardware and they lose money on every box. Perhaps $120 per unit, not including cost of doing business (R&D, packaging, marketing, etc.). Just how well would they do in the cutthroat smart phone business? Apple makes about $300 profit on every 8GB iPhone. They never sell anything at a loss.

‘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. In a consumer device, people just want something that works, they don’t want something as complicated as a PC.’

If Microsoft did this, it could essentially screw over all the phone manufacturers who currently use the MS mobile software. MS would now be directly competing with them. As the MP3 player companies that licensed MS FlayForSure how they felt when MS came out with the Zune, including a new software that essentially rendered PlayFor Sure obsolete?

When MS is a competitor, they will do what they can to make sure it is not a level playing field. Not really by having a better system but by removing the ability to compete from companies that had previously been customers for MS.

Besides, all Microsoft has ever been able to do really well is sell Windows and Office. These have accounted for maybe 80% of its profits. Entertainment and devices are essentially zero over the last 3 years.

Apple has always been a hardware company that sold some software. Microsoft has always been a software company that sells some hardware. Why would anyone think they have the skills to sell a phone?

Besides, Microsoft has much, much higher profit margins selling its software. Both Apple and MS has similar revenues last quarter ($16 billion vs. $19 billion) but MS had double the profits.

Why take on something very risky, away from their core competencies and with lower profit margins?

[Listening to: The Gallows Pole from the album “At the Gate of Horn” by Odetta]