The Top 5 Reasons Nokia Should Bid On Yahoo - InformationWeek

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2/6/2008
07:36 PM
Stephen Wellman
Stephen Wellman
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The Top 5 Reasons Nokia Should Bid On Yahoo

The entire tech universe is obsessed with Microsoft's attempt to take over Yahoo. The market has been waiting for this move for the last year, so most of the "analysis" coming from bloggers and industry pundits is well-rehearsed and polished, but hardly thought-provoking. Instead of rehashing this debate, I want to start another one: Why isn't Nokia bidding for Yahoo?

The entire tech universe is obsessed with Microsoft's attempt to take over Yahoo. The market has been waiting for this move for the last year, so most of the "analysis" coming from bloggers and industry pundits is well-rehearsed and polished, but hardly thought-provoking. Instead of rehashing this debate, I want to start another one: Why isn't Nokia bidding for Yahoo?I have to admit that most of the bloggers have taken a very U.S.-centric focus in this discussion. As my colleague, Eric Zeman, pointed out in a recent post:

The likelihood of another company stepping in and beating Microsoft's bid is not high. Rupert Murdoch, owner of News Corp., said his company is not interested in bidding. Rumors suggested that Apple might buy Yahoo, but that seems an unlikely scenario given Apple's strong relationship with Google.

Not many other companies have $50 billion sitting around burning a hole in their pockets.

He's right; there aren't that many tech companies (or any other kinds of companies) with access to the amount of cash it would take to challenge the gang in Redmond for Yahoo.

Well, one company, Nokia, could challenge Microsoft. Nokia has the cash, the resources, and a killer global handset business with which to fuel the deal.

Here are five reasons why I think Nokia needs to jump into the ring and fight Microsoft for the rights to buy Yahoo:

1. If Nokia wants to be a Web company, it needs a stronger desktop presence to complement its push into mobile applications.

Nokia is now a Web company, not just a handset maker. But, the company acts as if the Web is just mobile and has no desktop component. This isn't a very smart strategy.

The mobile Web needs to be seamless -- with easy connections between the desktop and the mobile phone. Nokia's rivals in mobile -- Microsoft, Google, and, yes, even Yahoo -- all have desktop products. These Web giants are leveraging their vast desktop Web audiences to grow their mobile initiatives. While Nokia has tons of mobile phone customers, it doesn't have as many Web application users.

With the exception of Navteq (a company Nokia is about to close on), Nokia really doesn't have much of a presence on the desktop. If it expects its new initiatives, like Widsets, to thrive, this has to change. Nokia could integrate Yahoo's applications with its cell phones, as well as leverage Yahoo's massive desktop and mobile user bases to grow its own initiatives.

2. Navteq + Yahoo = Nokia's dominance of mobile location.

While Google Maps and My Location continues to gain users and accolades, Nokia could leverage its pending acquisition of Navteq to dominate the fast-growing mobile location market. Sure, My Location has all the hype now, but Nokia owns the global distribution platform for mobile applications, the handsets. By improving the user interface on Yahoo apps, like Yahoo's Go platform, and bundling location-based applications on the devices, Nokia could beat Google Maps before it becomes the dominant platform for location based services.

3. Nokia needs to grow its U.S. market share and Yahoo is a brand that could help it.

While Nokia claims nearly 40% of the global cell phone market, it's a niche player in North America, and its reach into the mobile application market is equally small. Yahoo, after Google, is arguably the second most dominant U.S. Web brand. Nokia could leverage not only Yahoo's online market share in North America, but also its brand equity for new applications and even devices.

4. Nokia is a mobile ad company that needs to grow its share of online advertising.

Thanks to its acquisition of Enpocket, Nokia is a mobile advertising company, but it doesn't have an online desktop advertising business. I think Nokia could build all kinds of synergies between Yahoo's desktop and mobile platforms and its own mobile advertising business.

5. Nokia cannot afford to let Microsoft or Google gain any more online market share.

If Microsoft merges with Yahoo, the company will gain online market share. And while Google seems to be the most obvious loser here, Nokia would lose, too. Microsoft would gain more mobile users -- and more potential mobile advertising real estate -- if it gets its hands on Yahoo.

If Google can successfully circumvent the Microsoft deal with some kind of partnership with Yahoo, Nokia would likely lose, too. The most talked about scenario in this situation is that Yahoo would sell its online ad business to Google and partner with Google for ad revenue. This would cede more mobile ad real estate to Google, another Nokia rival. From Nokia's perspective, this is hardly a better alternative. If Google could then combine Yahoo's mobile ad real estate with its own Android platform, things could get even worse for Nokia.

What do you think? Should Nokia bid for Yahoo? And if your answer is yes, do you think it will?

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