Here's why I'm bearish on this so-called deal: Smartphone success here in the U.S. for Apple (Nasdaq: AAPL ) and Research In Motion (Nasdaq: RIMM ) won't necessarily translate into success worldwide, and Nokia is far and away the mobile market leader outside of North America.
In India, for example, Nokia controls more than 60% of the handset market.
And even in areas where Nokia is weak, adding Palm's Pre to its portfolio wouldn't likely be of much help. Take South Korea. Yesterday, regulators cleared the way for the iPhone to be sold there, but the region's top telco -- SK Telecom (NYSE: SKM ) -- says it will wait and see how the device sells before committing to it. Samsung and LG are the peninsula's hometown handset heroes. Nokia, like Apple, is a new player.
Nor has either company has seen much success in Japan. Palm would be a great buy for Nokia if it could somehow amplify its chances of breaking through barriers in Asia. I just don't see how it would. But I see synergies aplenty between Palm and Microsoft (Nasdaq: MSFT ) . Here's why:
1. There's an existing relationship
Palm has sold Windows Mobile smartphones for years, so it knows how to work with Mr. Softy. And the partnership has bred success. According to a recent survey of corporate IT managers, 57% of respondents said their users wanted further support for the Windows Mobile smartphones they're bringing to work. Only the iPhone ranked higher.
Surely some of those users are carrying Motorola (NYSE: MOT ) handsets, but it's a good bet that just as many are using Windows Mobile Treos from Palm.
2. Mr. Softy prefers partners
Microsoft doesn't like to go it alone in the mobile market, as its recent partnership with Nokia demonstrates. We also know that Mr. Softy is looking beyond its walls for help in creating new Windows Mobile software, and has plans for an entirely new smartphone platform code-named Pink.
When you're already reinventing the wheel, and you have a history of working with partners, it often makes sense to acquire assets. Palm's Pre could look good in Pink.
3. Mall rats like smartphones
Finally, let's talk retail. Say what you will about Microsoft's store strategy -- there's plenty of room for criticism -- but if Mr. Softy keeps its promise to go after mall rats, adding a sexy, affordable smartphone to its product line-up could aid sales.
Nokia would see no such benefit from working with Palm. Heck, Palm may even be best off on its own. But if there's going to be a suitor -- and Mr. Market seems determined to keep us talking about one -- let's at least consider a deal that makes sense. MicroPalm would.
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