Microsoft and Google aren’t exactly bosom buddies, but a recent series of Tweets and blog postings by the respective companies’ executives threatens to make that already-tense relationship extra sour.
Earlier this year, a consortium led by Microsoft and Apple (which included Sony, EMC, Ericsson and others) outbid Google for 6,000 wireless technology patents held by Nortel Networks. Some of Nortel’s patents covered the LTE (Long-Term Evolution) technology used by many smartphones currently on the market, and could have provided Google the cover it needed to repel intellectual-property lawsuits from its rivals.
Now Google’s on the offensive, claiming that the consortium’s motive for buying those patents is being scrutinized by federal regulators. “Microsoft and Apple have always been at each other’s throats, so when they get into bed together you have to start wondering what’s going on,” David Drummond, Google’s senior vice president and chief legal officer, wrote in an Aug. 3 posting on The Official Google Blog. “Fortunately, the law frowns on the accumulation of dubious patents for anticompetitive means–which means these deals are likely to draw regulatory scrutiny, and this patent bubble will pop.”
He went on to claim that the Justice Department is “looking into whether Microsoft and Apple acquired the Nortel patents for anticompetitive means.”
Microsoft decided it was time for a street brawl.
“Google says we bought Novell patents to keep them from Google,” Brad Smith, Microsoft’s general counsel, wrote in an Aug. 3 Tweet. “Really? We asked them to bid jointly with us. They said ‘no’.”
The same day, Frank Shaw, Microsoft’s corporate vice president of corporate communications (say that three times fast), also Tweeted: “Free advice for David Drummond – next time check with Kent Walker before you blog.”
He included a link to an Oct. 28 email sent to Brad Smith by Kent Walker, Google’s general counsel, suggesting that “a joint bid wouldn’t be advisable for us on this one.”
Is that a smoking gun? Not necessarily–that short email doesn’t delve into many particulars over the deal itself. But if Microsoft intended to blunt Google’s attempt to make itself look like an aggrieved party, it’s certainly succeeded–the online chatter this morning definitely seems in Redmond’s favor.
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Microsoft Acquiring Nokia Would Be A Really Bad Move
Will Microsoft acquire Nokia?
Um, probably not.
Nonetheless, the rumors are in full swing, following Russian blogger Eldar Murtazin’s May 31 tweet: “One small software company decided last week that they could spent 19 bln USD to buy a part of small phone vendor. That’s it.”
Murtazin has offered Nokia information before that turned out to be correct, so his tweet managed to catch a little fire on the Interwebs. Throw in Nokia’s tumbling stock price and some analyst comments, and hey, presto! instant acquisition “news.”
Nokia’s denying it. “These rumors are 100 percent baseless,” a company spokesperson reportedly told Reuters. For its part, Microsoft has a longstanding habit of not commenting on speculation, so as not to freak out shareholders any more than necessary.
Following Microsoft’s $8.5 billion Skype acquisition, though, I doubt the company has the appetite to swallow another major tech player so soon. Besides, there’s no need: Thanks to the agreement to port Windows Phone software onto Nokia’s smartphones, Microsoft has all the benefits of an acquisition for the low-low price of $1 billion over five years. Why pay $19 billion for the added burden of managing Nokia’s burning oil rig?
Yes, Nokia is a company in serious trouble, according to the analysts.
“We would continue to avoid the stock as Symbian smartphone sales are falling off faster than expected, and we are skeptical that new Windows Phone (WP) models will be able to replace lost profits,” Stephen Patel, an analyst with Gleacher & Company, wrote in a May 31 research note. “Our checks suggest mixed carrier support for Nokia’s transition to WP.”
Just to nail that point home, he added: “We remain concerned that WP industry sales remain below 2mil units/quarter and that [Nokia's] scale will not be enough to offset a faster-than-expected drop-off in Symbian phone sales.”
Other analysts are sounding similar notes of pessimism. “We believe Nokia is a great source of market share opportunity for Apple,” Brian White, an analyst with Ticonderoga Securities, wrote in a June 1 research note. “Microsoft’s myopic approach outside the PC market is likely to provide more of a drag for Nokia’s mobile phone business and uncertainty for customers, allowing Apple’s iPhone to gain even further market share in the coming quarters, in our view.”
In other words, Nokia’s transition from its homegrown mobile-operating system, Symbian, to Windows Phone is causing some major speed bumps. It’s unlikely that Microsoft will pay $19 billion for the privilege of inheriting that mess.
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