NEW YORK (TheStreet) -- Picture, if you will, a group of senior executives gathering around to (literally) perform a funeral for the top two rival products as a way to symbolize their intent to bury their competition.
Of course, the cryptic representation was all in fun and was nothing different than a typical pep rally at your local high school, where the message to the crowd is always the same -- "not only are we gonna win, but we're gonna beat them by this much." Except, they often forget that they actually have to play and execute and realize that the other team is not just going to play dead.
In this example, however, the products that were "laid to rest" was an iPhone from
and a BlackBerry by
Research In Motion
. The funeral procession, which took place two years ago, was performed by none other than the executives at software giant
, who upon the release of their Windows Phone 7, anointed themselves the official "iPhone and BlackBerry killers."
Interestingly, I suppose you can say that the company was half right as the BlackBerry has now died. However, it is without a doubt that Microsoft, marred by its own phone casualty, had little to do with RIM's homicide. As much as it would love to be credited for it, there have been too many witnesses to state otherwise.
The case has already been tried and judgments have been passed. The murder of the BlackBerry was committed by none other than Apple and assisted by
Android. Now, as for the iPhone and the attempts made on its life, not only has Microsoft failed, but in the process it suffered some
as it has failed to make a dent in the smartphone market. It soon realized that not only was it out of its league, but it came to the realization that in order to better compete with Apple and Google, it needed help.
Its response was to partner with
to see if a joint venture could do to its rivals what both firms have been unable to do on their own. However, Nokia was also in disarray and not only fighting for its own life against Apple, but it lost its status to
in terms of global sales. So as it stands, Samsung and Apple now account for over 70% of the global smartphone market. So what's left for Microsoft?
With Nokia, it has established a partnership of two companies that are suffering declining share in a product category they vowed to win. Now the pressure is on Microsoft, which firmly placed its foot in its mouth two years ago with its funeral bit and today appears committed to making it a self-fulfilling prophecy. However, the numbers suggest that consumers around the globe care very little about its promise and more about the product -- and, to date, Microsoft has not delivered much on the product side whereas its competition has.
What is also interesting about this "partnership" with Nokia is that it has only worked in Microsoft's favor while hurting Nokia's market share. Either Nokia has not been smart enough to realize this or it does not care. In either situation, it is a dead company walking as Microsoft has done nothing but sucked the life out of its business. Yet, Microsoft still faces an uphill battle as it only hopes to make a dent with its upcoming release of its Windows Phone 8. I think it will require another Nokia-type partnership if it hopes to make a meaningful run on the iPhone.
This time it will look to exhume Research In Motion and what is left of the Blackberry's lifeless body. The company that Microsoft once promised to bury can now become a valuable component in its mission to once and for all kill the iPhone. But will it make the call? Microsoft can afford RIM today for pennies on the dollar. It has the cash to make this deal happen yesterday if it wanted to. And it is one that makes perfect sense.
The fact of the matter is, even though RIM continues to deal with its own competitive issues, the company still generates a decent amount of cash and is a formidable player within enterprise. In RIM, Microsoft would acquire products such as the BB10 software, a growing music service as well as Mobile Fusion, a product that supports the collaboration of enterprise mobile devices, even that of competing models such as the iPhone and Google's Android.
Wall Street and consumers understand that the iPhone is not going to die -- in fact, with Apple's recent entry into China, its sales are only beginning to soar. However, the good news for Microsoft is that as much as it has fallen toward the bottom of the pile, it has nowhere to go but up. Interestingly, the company had a 9% market share in mobile phones prior to its Nokia partnership; today that number has dropped to 2%. So it gives me pause to consider that a RIM partnership or acquisition would make the situation any better.
Whether or not Microsoft will be successful at killing off the iPhone, acquiring RIM would at least become a revenue generator while it tries to steal bits of market share from Apple. A deal also has the potential to redirect Microsoft's focus to where I think it should have been in the first place -- attacking
and those devices that are on the Android platform. I think their collective success has hurt Microsoft more than the iPhone has on its own.
This is one of the reasons why I've always thought that the company's fixation on the iPhone was somewhat misguided as Google has become a threat to both its phone as well as its Office and OS businesses. For RIM, I think it will be raised from the dead only to be mummified for assets that it was not able to leverage due to poor execution. As with Nokia, Microsoft will get another chance to suck the life out of a dying company -- except RIM will know it's coming.
At the time of publication, the author was long AAPL and held no positions in any of the stocks mentioned, although holdings may change at any time.