Wednesday, May 4, 2011

RIM/Microsoft (Short Take)

a chart to describe the search engine market
Blackberry maker Research In Motion continues to make moves designed to reverse their recent setbacks and move the company in a positive direction; the most recent being an announcement that they'll be switching from Google to Microsoft's Bing as the default search engine on their phones and devices.

Based on my reading it seems clear that Microsoft is paying a hefty sum of money for this change. Clearly Microsoft is working hard to build a presence in the mobile space. Their partnership with Nokia was apparently just the opening salvo of a new offensive. With the Nokia deal they get the potential for substantial exposure and market penetration of their windows phone 7 operating system. Their RIM deal doesn't go that far but it does give them first dibs on a substantial additional chunk of the mobile search space going forward.

This deal seems to make good business sense from RIM's perspective. They get cash which is never a bad thing and likely other benefits as well.

Microsoft now has the potential to make substantial inroads into Google's search engine dominance. Given the probable continued growth in this space I don't believe Google will see much of an impact revenue wise in the short to midterm. That could change a couple of years out if things work out the way that Microsoft is no doubt hoping.

On a side note, it always kind of amuses me when industry pundits try to pick a winner in these scenarios. Both companies win assuming both sides are competent and I see no reason to assume otherwise in this case. The point of a partnership isn't to cheat your partner, it's to gain an advantage in the marketplace that will be mutually beneficial. The loser in this deal is very likely going to be Google.

Image via Wikipedia
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