The Microsoft-buying-Nokia rumor goes way back. The rumor actively floated around inside of Nokia for many years when I worked there even going back to a time Nokia was at the top of its game, and Nokia's enterprise value was more than five times what it is now. There was no evidence, just some people's gut instinct. And Friday-morning, market-trading rumors of course.
The rumors popped up now again, but talk really went wild when former Microsoft exec Stephen Elop was hired as Nokia's CEO in late 2010, and again when Nokia announced its partnership with Microsoft to bring out smartphones based on MS Windows Phone.
Some say Microsoft needs Nokia's brand and distribution in order to make it big in the mobile world, others say it's Nokia's IPR, others say it's Nokia's design skills, and still others say it's Nokia's maps.
But the key argument I've been hearing is that Microsoft needs a manufacturing base and when it comes to mobile logistics, who in the world is better than Nokia? There's no doubt that few companies can put handsets together like Nokia. The company assembles something along the lines of 10 handsets per every second of every day of the year and each handset requires more than 100 components. It takes a well-oiled machine to pull all these pieces together.
But let's note the trend. Manufacturing is heading East. Over the past few years, Nokia has closed or is in the process of closing handset factories in Germany, Romania, Finland, and Mexico and moving production closer to the components.
And contract manufacturers such as Foxconn, Compal, Quanta, and Flextronics are literally picking up steam. Handsets, laptops, televisions, cameras, Blu-ray players, remote controls. If you've never heard of any of these companies, look around your living room and your kitchens for one of their products. A handful of assembly firms in the world almost certainly made that CE stuff you see. (Foxconn is so big, that during the financial crisis of 2008, the company announced layoffs of 100,000 and nobody really noticed.)
(NOTE: I am aware of the stories of Apple possibly bring some PC manufacturing to the U.S. and perhaps in-house.)
So the news of the day is that Microsoft still isn't going to buy Nokia. One large, rather slow-moving company of 92,000 is not going to buy another large company of 45,000 (105,000 if you include NSN) hoping to become more nimble and quicker to market.
In my opinion, it's always been a strange rumor. The pieces just don't fit together.