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Microsoft's Frenemies: The Necessity of Partnering Up

Shane O'Neill | May 13, 2011
Microsoft's partnerships with RIM, Nokia and Yahoo (and acquisition of Skype) underscore the need to form alliances against Google or Apple in certain markets.

Combine that with the hold that Apple has on smartphones and tablet PCs, and Microsoft has no choice but to figure out a collaborative alliance strategy, says Hoque, adding that Microsoft has done all it can on its own by developing Bing and Windows Phone 7 and aggressively marketing both entities.

"In a way, they are stuck," says Hoque. "They have to form alliances."

But in the end, Microsoft's recent partnerships will be good for overall innovation, he says.

"When companies team up, it forces the common enemy - in this case Google or Apple - to be more vigilant about their innovation and ability to stay on top. That's how markets grow."

Is it possible that these alliances might backfire at some point?

"Sure, they could backfire if Microsoft and its partners don't have a good governance model and a smart integration strategy," says Hoque.

It's worth noting that Microsoft does not have a great track record on integrating technologies from acquisitions and partnerships.

The Yahoo partnership has yet to generate the revenue either company expected and has not reduced Google's search market share. Microsoft's 2007 purchase of online advertising company aQuantive for $6.3 billion has had mixed results, and its $500 million acquisition of Sidekick-maker Danger in 2008 led to the disastrous Kin flip phones that folded after two months.

But win or lose, Microsoft's alliances show that the world is hungry for more and better technology. This should come as good news to Apple and Google, says Hoque, even as a united front forms against them.

"Obviously there's a huge demand out there for smartphones and better search functionality, and that's why you see these Microsoft alliances," he says.

"When there's no demand, there's no market."

 

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