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Competition 2.0: Microsoft Sharpens its Fangs

posted Jun 7, 2011, 8:05 AM by Julien Pillot   [ updated Jun 14, 2011, 1:13 AM ]

"One small software company decided last week that they could spent 19 bln USD to buy a part of small phone vendor. Thats it.” (Eldar Murtazin - 06/01/2011)

In a pretty ironic way, this recent tweet by Eldar Murtazin - the popular and well-informed Russian tech analyst as well as the Chief Editor of Mobile Review – drove the whole sector-specific’s businesses, experts and lawyers frenzy. One might interpret this new tweet as pure rumor likely to generate a global buzz. Nevertheless, it is obvious that Redmond made some big moves during the last months in order to challenge serious contenders such as Google and Apple on web 2.0 softs and services and mobile OS markets in a more vigorous way.

In the midst of these tactical moves lie the takeover attempt on Yahoo! (solved in 2009 by exclusive agreements and alliance on Search Engines and online Advertising) and the company’s record-breaking acquisition of Skype (the global leader in VoIP) for USD $8.5 billion in May 2011. More recently, Microsoft and Nokia already announced a broad mobile phone partnership which consists in the building of a third ecosystem liable to compete with Apple’s iOS and Google’s Android. In a way, such a partnership that joins two powerful but lagging companies (Microsoft experienced difficulties to exist on the mobile OS market while Nokia, once the dominant power of the mobile phone industry, has ceded the smartphone initiative to Apple's iPhone and Google’s Android) into mutually allies in the mobile phone market shown a common desire to reallocate the forces in the whole industry through a mutually profitable experience and products sharing (see the scheme below). But, what Eldar Murtazin implies is much more than a mere alliance and highlights Microsoft’s coherent strategy to achieve a tremendous come-back on the top of the bill, whether the merge with Nokia likely to occur or not.

While the emergence of Bing mainly flows from the partnership with Yahoo!,  the acquisition of Skype opens up new horizons and synergies for Microsoft whose homemade products, essentially PC and mobile OS, instant messaging clients (Lync and MSN) and even the Xbox division, could encompass the famous software natively. Moreover, an hypothetic USD $19 billion outlay for Nokia (nearly 50% of their cash at hand) outlines an obvious ambition to control the experiences on their mobile devices and, for this purpose, to produce their own devices (and, then, much like Apple, control the whole production process and consequently the entire value chain).

In a nutshell, as meticulously as a chess master, Redmond plays its pawns on the (converging) tech markets chessboard. Aiming to recover the highest brand recognition as well as its unsteady throne, Microsoft seems at last to use drastic moves and engages stiff competition in order to fill the gap. For sure, next months’ moves in this over-strategic sector will be of great interest for competition (2.0) economists and analysts. I just can’t wait to witness what happens next!