May 2007: Microsoft Yahoo is a done deal even if they don’t know it yet
This is a great move for Microsoft, but if RIMM stock drops to a reasonable earnings multiple, it would be an almost necessary buy for MSFT too.
The reason:
Smartphones have become an essential business tool, like the desktop computer in the 80s.
In a downturn, in particular, if you buy 500 employees an iPhone you look spendthrift, buy them a Blackberry and you look plain thrifty. Buy them anything else and you might look stupid.
The Apple Mac OS may have been more like the OS that powers business computers today, but the less innovative DOS is what made Microsoft dominate. An overlooked reason is purely psychological, and predated the raft of software that made it a rational one: DOS looked more business like.
DOS succeeded at a time when command line computing seemed like the real deal compared to cartoon-like mouse and icon interfaces.
Similarly, a device like the iPhone looks like a luxury consumer device, while a Blackberry is less innovative and more boring. Like conservative office furniture, it looks right for business and is the best of breed. Smartphone alternatives like Palm increasingly look like also rans. A Blackberry will be the de facto business standard smart phone and therefore it competes on Microsoft’s home turf.
Microsoft need Blackberry, because its the right kind of crappy.