Much scratching of heads about Microsoft’s decision to fork out $7.2bn for Nokia’s phones business – it’s an obvious thing to do but they had that business already as the only profitable phone that Nokia is selling is the new Lumia Windows Phone.
John Gapper, I think it was, wrote a piece in the FT recently saying that Microsoft ought to quit the business of selling gadgets to consumers and concentrate instead on selling its phenomenally high margin Windows products to businesses. This may be a declining business, with sales of PCs reducing, but it’s still a big and hugely profitable one.
Look at what Microsoft has bought (and sometimes sold, at a loss) during Steve Ballmer’s reign as CEO. Nokia (now), Skype, Razorfish (now part of Publicis Groupe) and aQuantive. Plus also some you haven’t heard of: Onfolio, Lionhead Studios, Massive Incorporated, ProClarity, Winternals Software, Colloquis, Fast Search & Transfer, Navision, Visio Corporation and Yammer.
What’s the point? Apple doesn’t buy anything. Microsoft should have the wit and imagination to invent these things (assuming they’re of any worth) itself. It certainly has the money. At least it hasn’t bought Yahoo yet; a rare outbreak of common sense.
So Microsoft is barking up the wrong tree at the wrong time – after everybody else.
What does this mean for its agencies? Well it’s hard to know who exactly they are at any given point. JWT supposedly handles Nokia although the new (and quite good) campaign for the Lumia in the US is through Crispin Porter. McCann handles a big slice of core business plus Xbox (although fancy bits find their way elsewhere).
Microsoft is like a drunk staggering down the street (albeit one with enough cash to call a cab and get home). A really good and sustained ad campaign might be the only way of making this expensively-assembled collection of gadgets nobody much wants pay their way.