Two Big Deals in the Mobile World

The U.S. Labor Day weekend has not been a restful one in the mobile communications and devices industry. Vodafone is selling its share of Verizon Wireless to Verizon in a blockbuster $130 billion cash and stock deal, and Microsoft is buying Nokia's struggling mobile phone business, other assets, and licenses for 5.4 billion euro (about $7.2 billion).

What have these deals got to do with mainframes? Plenty. The mobile business is still growing rapidly, and mobile devices (smartphones and tablets) are rapidly displacing traditional PCs as the dominant application and information service clients. That growth is increasing transaction volumes and associated batch processing on mainframes. It's also encouraging existing and new mainframe customers to add applications and application functions to their mainframes, especially to support increasing demands for continuous service and improved security given the challenges mobile devices present.

So how can mainframes address mobile platforms? They already do, and it's quite easy to do more. One excellent example is IBM Worklight for zEnterprise which makes it easy to support multiple mobile device types from your mainframe with functionally rich, device-appropriate, secure "apps" and mobile Web user interfaces. Another example is the IBM CICS Transaction Server Feature Pack for Mobile which is available to CICS customers at no additional charge and which supports lightweight, mobile-appropriate JSON Web services.

The contrast between the two deal sizes is interesting all by itself because it demonstrates where the value has shifted in the mobile market. The smaller Nokia-Microsoft deal is an attempt to combine two weak mobile players into one in order to try to compete with Apple and Google, in particular. The trouble is that Google (especially) has a different business model with lots of services, advertising, and content, and that business model is working well. Google seems to have won the mobile OEMs who were perhaps a bit uncomfortable with Google's acquisition of Motorola, but Microsoft's acquisition of Nokia trumps their mild concern. In other words, Microsoft isn't going to get any help now from Samsung, HTC, LG, ZTE, Lenovo, and other mobile device makers. It'll also be tough for Microsoft to compete against Apple in the premium segment of the mobile device market, and Apple is also strong in content. All that said, I think the acquisition makes sense for Microsoft. Microsoft really doesn't have much choice. Nor does Nokia. When Nokia's CEO, Stephen Elop, a former Microsoft executive (and soon a Microsoft executive again it seems, perhaps even the next CEO) bet his new company on Microsoft's struggling mobile Windows platform, he set in motion a chain of events that would very likely result in Nokia's divestiture of its mobile device business to Microsoft. I don't think too many people are surprised that Microsoft is carving up Nokia now. Cynical observers might even say that was the plan all along.

An interesting footnote is what happens to struggling Canadian mobile pioneer Research In Motion (RIM), makers of the Blackberry. Their new BB10 platform is technically very good, but that's never enough. According to reports RIM is at least open to the idea of selling itself to another company, but there's no perfect suitor available. None of the Chinese companies make much sense given that many of RIM's government customers would flee if such an acquisition came to fruition. HP might make some sense, but is there room for both a third and a fourth mobile platform, and would HP have any chance of finding room in the mobile market given Microsoft's still deep pockets? (Microsoft's Nokia acquisition is another piece of bad news for HP at least in terms of limiting HP's options and in terms of pulling some of Microsoft's attention away from the traditional PC business and OEMs like HP.) Samsung might be interested in acquiring RIM. Samsung would probably take BB10 and merge it with Android, retaining Android application compatibility but adding some more Samsung/RIM differentiation. That'd make some sense if the price is right. Google might have similar ideas, also at the right price. Both Samsung and Google wouldn't mind having RIM's patent portfolio. I don't see IBM being too interested except perhaps for RIM's Blackberry Enterprise Server (BES) software which another suitor might be willing to carve out for IBM, HP, or somebody else. Oracle, Facebook, and Dell are longshot candidates to buy RIM, each for different reasons. Or maybe nobody buys RIM, and we (probably) fondly remember the Blackberry much like we remember Amiga computers.

It's rarely boring in the technology industry.

by Timothy Sipples September 3, 2013 in CICS, Current Affairs, Financial, Web Technology
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