One of the weirdest forms of journalism is the retroactive irrelevant scoop. As in, “Hey, there’s this thing you didn’t know this company was thinking about doing. And guess what — it turns out they’re not doing it.”
The Wall Street Journal scored a twofer in this category this week, with the “news” that Microsoft explored plans to build an e-commerce marketplace to rival Amazon and eBay, before nixing the idea; and that it held advanced talks with Nokia about buying the company’s mobile handset business, but wasn’t able to come to terms.
After doing a little digging into both of these stories, it’s safe to say you can pretty much ignore the e-commerce thing. From what I’ve picked up, it wasn’t really on the radar at the higher levels of the company, and was never much of a possibility to begin with.
But the Nokia story is more meaningful. The possibility of Microsoft doing this type of deal has come up repeatedly. It wouldn’t be a surprise to see it resurface again in the future.
Microsoft would use an acquisition like this to expand directly into the smartphone business — controlling the flagship hardware for Windows Phone in much the same way it offers its homegrown Surface tablets with Windows 8.
But how much much difference would buying Nokia make for Windows Phone? Yes, that’s the problem.
Microsoft and Nokia (led by former Microsoft exec Stephen Elop) are already close partners, and for better or worse, Nokia has already bet its smartphone business on Windows Phone. So simply bringing that relationship in-house would basically just give Microsoft CEO Steve Ballmer and the company’s top executives more of a direct role in smartphone hardware.
Probably the biggest impact in the short term would be to further reduce Microsoft’s profit margins.
And Nokia would appear to have other options. An executive Chinese telecom giant Huawei told the Financial Times this week that it would consider buying Nokia … but Huawei considers Windows Phone to be “weak.”