Why Microsoft should buy RIMM or Nokia

"Hardware and Software need to be tightly integrated to deliver the best customer experience".. Remember this quote! I am sure you know who said that :). Microsoft is learning this hard way from success of Kinect. It has taken the entire world by surprise that microsoft could produce a innovative product.

Fast forward... Windows OS 8 launch. I read a article somewhere that by 2015 OS market for tablets would be led by, surprise surprise, Windows (about 44%). Followed by Android 32% and iOS 18%. While I am not surprised at windows number, IT organizations will drive that number, I am surprised at iOS at a distant 3rd. More on this in a later blog but point is that mobile market is changing radically and very fast before someone has time to react. Same thing happened to Nokia which saw its market shrink from 44% to 7% in just 8 quarters.

That brings me to Phone market. Believe it or not, IDC research shows that Android has 61% market share in 2012 in  smart phone market. Windows has mere 5% and iOS has 20%. Here is projection for OS market share on SmartPhones

Worldwide Smartphone Operating System 2012 and 2016 Market Share and 2012-2016 Compound Annual Growth Rate 

Smartphone OS	2012 Market Share	2016 Market Share	2012 – 2016 CAGR
Android	61.0%	52.9%	9.5%
Windows Phone 7/Windows Mobile	5.2%	19.2%	46.2%
iOS	20.5%	19.0%	10.9%
BlackBerry OS	6.0%	5.9%	12.1%
Others	7.2%	3.0%	-5.4%
Total	100.0%	100.0%	12.7%

While there is substantial growth for Windows OS in smartphone market, you see that Blackberry OS is not declining a lot. Windows OS has a much better chance of growing if it has following

• A End to End story on customer experience, From Hardware, to OS, to app store, to selling it.
• Get a head start as things are changing fast. 
• Get into Android market space by creating a alternative to iOS.

To accomplish 1, Microsoft needs to have a a dying Hardware phone provider which is in search for a partner. That will also help in getting a head start as it will give it a well set user base. To acquire a phone maker, Microsoft has many options. Lets evaluate

• HTC - I do not thing HTC can provide Microsoft with any strong base to begin with but HTC strategy for cheap phones will not help them. Besides, most HTC are on windows already, and userbase is not attractive. I do not think any of HTC or similar will help MSFT
• Nokia - Nokia provides Microsoft with a neat option, Strugling maker, deep penetration, great brand name which is eroding but can be restored, entry into Asian market, etc. This is a good buy. Price is a question which I think at 1.50 - 2.0 becomes very attractive. 
• RIMM-  This is the best option according to me. RIMM gives windows a ready business customer base with deep loyalty. With Windows 8, microsoft has a chance to shut doors on all OS for at least business customers. Both for Tablet and smartphone. Imagine a CIO saying buy once, deploy on all + Manage centrally. All current systems work perfect, no migration required!!! Business shut for iOS and Android. Microsoft can to start with integrating Windoes 8 with BES (Blackberry Enterprise server) and later on come out with it's own. This one is a no brainer, only thing is price. I think price is right too.

Without an acquisition, MSFT will always earn 20-50 bucks on each device sold but never be able to make a seamless customer experience. 

All this have to have a timing. When will Microsoft make a move. My guess is that by Q1 2013, it will make a move, possibly earlier. It is just waiting for Windows 8 launch on Luminia and a decent success will make it pull the trigger.

Comments!!!

Keeping your organization's technology on cutting edge

Every organization builds software products and tools to keep an edge on the market. To begin a software project, various technologies are evaluated, and decisions are made on the best suited ones. teams are excited and motivated to build them and a lot of organization focus, energy, people, and lastly money is spent on make them. Over period, the technologies move on but the products using them do not. Organizations are left with supporting very old technologies. Case in point are huge mainframe applications built in early 70s to support various business fucntions. Mainframes have become like extinct dinosaurs!!! In this new age, change in technology is faster than building the new applications. a newer version of .Net hits the market before the application hits the market.

What can technology leaders do to keep up with the changing technology. I would segregate this into 2 sets of problems. How to upgrade your existing apps to newer technology. And secondly keep on the cutting edge of technology.

When you see your products being obsolete, technology leaders should identify the need to adapt quickly. They need to build the business cases to make an investment in upgrading the underlying technology. This is no different than building a business case for a new product or tool but adds a couple of dimensions. Leaders need to consider following end objectives while building the case for an technology upgrade.

• Will this investment help us bring in additional business (more customers).
• Will this investment help us achieve greater operational efficiency hence decrease support costs
• Will this investment help us give us edge over our competition
• Will this investment give us a launching pad for next gen
• Will this investment help us sustain in the market or we will be extinct like dinosaurs.
• Will this investment help us build intangible benefits like employee development, ease of hiring in newer associates, motivated employees etc.
• Keeping long term in mind, What is the cost of delaying the upgrade

Like any business case they need to consider the costs associated. They need to think about following

• What is the direct cost (hours, licenses, infrastructure) associated with it. Without considering all the costs a true business case cannot be built.
• What are the indirect cost associated with the change. Some of the indirect costs are management costs, employee perks, employee trainings, support costs.
• What is the disruption factor. Since you will be dedicating parts of you energy in a technology upgrade, what will lost time cost you in terms of your competition.

Answers to above will get you a very clear ROI on investments you are going to make on a major technology upgrade. You need to identify the break even point in terms of time and presnt your case accodingly. If you decide to go ahead with the upgrade (and rightly so), leaders need to put in right plans to go about the upgrade. A few approaches to go about are

Big Bang upgrade - In this approach, you can slow down or stop making upgrades to your existing platform and dedicate most of you energy in upgrading the the existing platform. Addition of newer features is stopped(or extremely slowed) until the new platform is up and running. If your business permits, this approach gives you certain advantages

• Faster time to market
• No rework in 2 platforms
• Less maintenance costs as you do not have to support multiple platforms for long.
• High operational efficiency.
• Cleaner code bases.

On the flip side, disruption is higher to existing business and if the opportunity cost is higher, it might make sense.

Gradual Upgrade - In this approach, teams will start identifying the modules on 2 axis scale of ease of implementation and impact to business. modules easy to upgrade and having more impact to business will be taken up first followed by items in 2nd or 3rd quads and finally from 4th quad (see Pic 1).

This approach is used when the disruption cost to existing business is high and big bang upgrade is not possible. Advantages with this approach is to buy more time and ability to perform upgrade with fewer resources available.

Upgrade New modules - If ROI on upgrade to existing modules is not high, then you might choose to develop newer modules/apps in latest technology and not upgrade existing apps. This will eventually lead your demise :) but it can be used to buy time while upgrading your organization skillsets.

Once you choose the strategy to upgrade, Technology leaders need to lay the ground work appropriately or they will fall flat on there faces.They need to plan for

• Right skill set for resources and sometimes they need to look outside besides training existing resources
• Ensure training to build the right skill set in the team.
• Infrastructure requirements for upgrade.
• Ensuring organization buy in and its vision for long term.
• Short term needs should not jeopardize the upgrade plans.

Keeping up with the changing technology is another challenge which technology managers need to keep in mind. As they say prevention is better than cure, keeping your platforms constantly on pace with changing technology is a better way. It is estimated that it could cost you as much as double the resources on a technology upgrade than regular upgrades. So the question is what can Leaders do to keep up. Well there is no defined recipe for this but a proactive approach helps a lot.

• Keep innovation as part of your budget. During your yearly Budget exercise, dedicate some % to technology upgrades or research.
• Formally evaluate your technology strategy with your team and management and propose recommendations.
• Keep in mind that your CEO does not understand the implications of outdated technology, it is your job to explain it to the entire organization.
• Encourage your team to be trained on new technology. Institute processes to keep your employees well informed
• Have discussion forums in your teams and across to make sure ideas are exchanged.

Keep in mind that technology change is a interesting challenge for your team and organization.

Thanks