With its $7 billion bid for Nokia, Microsoft has crossed the Rubicon into being a vertically integrated mobile computing company with a hard road ahead.
With its $7 billion bid for Nokia's cellphone business, Microsoft has completed its transformation into Janus, a two-faced hardware/software giant that should scare away any potential partner.
Why would anyone else ever want to make a Windows Phone now? The hearty few still cranking out Windows tablets must see the writing on the wall.
In the new mobile markets, Microsoft aims to ape Apple. It wants to go it alone as the vertically integrated company creating new mobile products.
There's just one problem. Unlike Apple, it does not have an integrated team with an identity, history, and passion for integrated products.
I give Microsoft credit for its good work establishing a solid SoC team for the Xbox. But that group has a huge chasm to cross to ever compete with Qualcomm's Snapdragon or Samsung's Exynos. So I question the real advantage of a vertically integrated mobile group.
Clearly, Microsoft is in a tough spot. Android and Apple's iOS dominate the new mobile markets. Windows struggles for relevance, trying to beat BlackBerry for a distant third spot.
The acquisition of Nokia will not make its Windows Phone products any more compelling. Stephen Elop, Nokia's turnaround CEO from Microsoft, had already staked that company's future on being the premier maker of Windows Phones. For what it's worth, he got his wish.
Microsoft has a long history of reaping the majority of profits from notebooks and desktops, keeping its hardware partners locked into commodity products. That hand will continue to play out amid declining growth prospects. In the mobile era, the other big opportunity is in the cloud, but this is increasingly Linux territory.
The Windows giant has a long future ahead of it milking its traditional PC franchise and making some money in game consoles and Web services. But it's not the next Apple. It's just the next Nokia.