Microsoft's partnerships: Hits and misses

Redmond has some head-scratching strategic partnerships such as Barnes & Noble's Nook, but a few have played out decently, at least in terms of distribution.

Larry Dignan
3 min read

Are Microsoft's lame investments and partnership strategies an indication that its business is a mess? Not necessarily. Microsoft appears to merely be a hit-or-miss strategic investor. 

A Wall Street Journal column noted that Microsoft's partnerships with the likes of Barnes & Noble, Best Buy, Yahoo, Nokia and Dell are all lacking in some way. The implication is that Microsoft is limping and it prefers to partner with companies that have similar issues.

Another way to look at Microsoft's partnership issues is that it is a so-so strategic investor that has as many hits as misses. Microsoft also repeatedly gets sucked into distribution as a primary reason to do a partnership. Why? Microsoft has been playing from behind in multiple categories such as smartphones and tablets.

Here's a look at Microsoft's deal-making, the rationale and whether or not the partnerships make sense:

Barnes & Noble. Microsoft bought into the Nook tablet franchise and the e-reader movement. Barnes & Noble is retreating from the tablet market and perhaps Microsoft garnered some intellectual property know-how. The "Wook" never happened. Rationale behind the deal: Who knows? What the Barnes & Noble partnership means: Microsoft can make some spectacularly bad investments.

Nokia. The gimpy smartphone maker made a big bet on the Windows Phone platform. Microsoft and Nokia are now connected at the hip, but neither company is lighting up the market share standings. Rationale behind the deal: Microsoft really didn't have a lot of hardware partner options. Samsung and HTC were with Android. And Apple and BlackBerry had their own mobile platforms. What the Nokia partnership means: Microsoft still has the potential to garner market share globally with the handset maker and the two companies have to stick together. Overall, the Nokia partnership isn't a bad deal for Microsoft but will take time and patience. Without Nokia, there's no way Microsoft would be in the running to be a No. 3 smartphone platform. 

Best Buy. Microsoft is creating Windows zones inside Best Buy. Sound familiar? That's because Apple and Samsung already have turf inside Best Buy. Rationale behind the deal: Microsoft needs to sell Surface devices and needs distribution. What the Microsoft partnership means: Microsoft is late to the game, but Best Buy is an important partner.

Yahoo. The Yahoo partnership with Microsoft is critical for the software giant. Without Yahoo, Microsoft would never be a search player. Yahoo provided distribution for Bing, and Microsoft merely has to keep revenue guarantees going forever until it can measure up to Google's click-through metrics. Rationale behind the deal: Microsoft wanted to be a search player. What the Yahoo partnership means: There wouldn't be a Bing without Yahoo's distribution. Microsoft is now using Bing as a platform across its products.

Dell. Microsoft floated some capital in Dell's going-private plan with Michael Dell. Rationale behind the deal: Microsoft sees some basic return on its investment and keeps a partner in the fold. What the Dell partnership means: Not much, but the two companies are partners beyond the consumer front.

The overall theme here is that Microsoft's partnerships may have some reflection on the software giant's consumer efforts, but also keep in mind where the company isn't cutting deals: on the enterprise side. Microsoft's enterprise business is humming along.

This story originally appeared at ZDNet's Between the Lines under the headline "Microsoft's hit or miss strategic partnership history."