Google purchased Motorola and Microsoft acquired Nokia for the same strategic reasons and at approximately the same time, namely to strengthen their position in this increasingly mobile world. How these acquisitions have played out offer some revealing insights into these two technology giants.
1. Both used substantial profits from other businesses to fund the multi-billion dollar acquisition price, and cover annual operating losses that are expected to continue for the near foreseeable future.
2. Both saw strategic value in patents/intellectual property, in light of an increasingly litigious common enemy, Apple.
3. Both saw a strategic fit between their core businesses – search and PC/Desktop – and handheld devices, which could not be fully achieved by simply offering a smartphone operating system.
4. Google wants to replicate (in the mobile world) Microsoft’s PC/desktop dominance, which was achieved through a thriving eco-system of vendors, partners, developers, OEM’s, etc. So the Motorola business unit is explicitly separated from the Android development teams, to retain the loyalty/trust of Motorola handset competitors including Samsung, HTC, LG and others. In the end Google wants Android to be as powerful in the mobile space as Windows is in the PC world.
5. Microsoft in contrast, suffering from both Apple envy and virtually no manufacturers willing to build Windows Phones, is going “all in” with Nokia.
The 2013 Holiday season should be dominated by Android and Apple purchases, with Microsoft a distant third. But Microsoft’s long-term commitment to the Windows Phone/Nokia platform – regardless of its next CEO – is a very good thing for businesses and consumers, as it will keep Apple and Google on their toes.