Huawei's interest in Nokia makes it a huge threat to Microsoft

Nokia has at least two potential suitors -- and the luxury of time to make a decision

Rumors that Microsoft has recently been wooing Nokia, first reported by The Wall Street Journal, are certainly plausible -- and not entirely surprising. Microsoft made it clear it had a long-term relationship in mind when it penned that billion-dollar deal with the Finnish phone maker in 2011 in exchange for Nokia's agreeing to focus on cranking out the finest Windows Phones. But now it looks like Nokia has another suitor knocking: China-based phone maker Huawei.

In a nutshell, Nokia's seen increasing sales on its Windows Phone line -- and Huawei can't overlook that fact. Nokia remains a worthy adversary, especially with backing from Microsoft. If Huawei got its hands on Nokia, it could expand its market share, fatten up its portfolio of smartphone features, and then decide whether to build quality Windows Phones or treat Microsoft' mobile phone platform as a second-class citizen. In short, it could gain substantially from preventing the birth of Microkia -- which for the moment makes Huawei a bigger threat to Microsoft than Apple, Google, or Samsung.

Huawei has even hinted at interest in Nokia: A big-wig at Huawei said his company would "consider buying Nokia" -- and he also dismissed Windows Phone as "weak," according to The Financial Times. That second part sounds mighty ominous coming from a competitor looking to buy out your No. 1 OEM. It's even more ominous when you're an iconic American company -- and said competitor is at odds with the United States government.

Huawei must clearly see the value that Nokia holds for Microsoft: It arguably offers the top Windows Phones on the market. That's not saying much, perhaps, but it's a start. It shows that Microkia could be a contender. If Microsoft were to acquire Nokia, it could harness the company's treasure trove of mobile patents, hardware expertise, connections, distribution channels, manufacturing facilities, and so forth. Microsoft would be equipped to start cranking out its own dream Windows Phone, brimming with exclusively patented Microsoft and Nokia technologies. That combination, with the right marketing and price points, could transform Microkia into a potential smartphone superpower.

Thing is, Huawei doesn't need another rival -- it's already struggling to keep pace with Apple and Samsung -- and now it sees Microsoft-backed Nokia gaining some momentum. What better way to prevent Microkia from emerging as a threat than to block Microsoft and Nokia from ever uniting by acquiring Nokia and forming the mighty Huakia, thereby preemptively defeating Microkia while girding for battle with Apple and Samsung.

Nokia is in a better place than it was a couple of years ago. The company took something of a gambit in 2011 when it agreed to become Microsoft's bestest billion-dollar buddy, rather than opting to focus on Android or any other platform. Critics may say that Nokia chose poorly in slipping into bed with Microsoft, but Nokia hasn't exactly suffered from the relationship; it's turning a profit. There's no way of being certain that Nokia would be as well off today if it had rebuked Microsoft's offer and tried its hand against Samsung with Android.

For the time being, Nokia has options and time -- so why shouldn't it continue riding the Windows Phone gravy train? Nokia could become increasingly profitable and perhaps less dependent on Microsoft if it comes up with a winning platform, whether Android-based or otherwise (e.g. Firefox OS). Or Nokia could ultimately find that it has no choice but to put itself up for sale -- and then watch Huawei and Microsoft engage in a bidding war.

It'll be interesting to see how this plays out.

This story, "Huawei's interest in Nokia makes it a huge threat to Microsoft," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow on Twitter.

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