The past: The worst wireless acquisitions of all time
Sprint acquiring Nextel
How much: $36 billion
What happened: Sprint's decision to combine with Nextel in 2005 to form Sprint Nextel (NYSE:S) was a blockbuster merger that brought together a traditional cellular company in Sprint with one that was geared more toward enterprise and public-safety workers in Nextel. In hindsight, the challenges of integrating two different networks (CDMA and iDEN), cultures and companies proved to be far more difficult than either company likely imagined. It has also been a financial and strategic blunder for Sprint.
In February 2008, Sprint wrote down $29.7 billion of the $36 billion it paid for Nextel. While Sprint CEO Dan Hesse has tried, with some success, to rejuvenate the Sprint brand after years of mismanagement and poor customer service, Nextel subscribers, especially postpaid customers, have continued to flee the company, weighing down its results and subscriber numbers. In December 2010, Sprint said it will start shutting down the Nextel iDEN network in 2013 as part of its Network Vision network modernization plan. In addition, Sprint said that by the fourth quarter of this year it will launch its upgraded push-to-talk service on its CDMA network--moving further away from iDEN, which provides PTT service. Ultimately, Sprint realized that managing multiple networks was not in its best interest and decided to cuts its losses.
Hewlett-Packard buying Palm
How much: $1.2 billion
What happened: After weeks of speculation over which company would buy Palm, Hewlett-Packard stunned the mobile world with the announcement in April 2010 that it would acquire the company and its webOS platform for $1.2 billion. The move represented a trend among computer makers looking to follow Apple (NASDAQ:AAPL) into the growing market for smartphones. HP completed its acquisition of Palm in August, and pledged to release a webOS tablet. Speculation built for months over what HP's new webOS devices would look like. In February, HP announced the Pre3, the Veer and the TouchPad, the first webOS tablet. The tablet was met with mixed reviews, with many complaining that it felt the product had been rushed to market. In late June, HP confirmed it was negotiating with a number of companies to license its webOS software platform. Shortly thereafter, HP moved some of its top executives around in an attempt to drive the growth of webOS. Specifically, the company moved former Palm CEO Jon Rubinstein away from direct control of webOS to work on broader product innovation. Then, on Aug. 18, Hewlett-Packard discontinued its webOS devices business, specifically the TouchPad tablet and its webOS phones, This move was a stark reversal for HP nearly 16 months after it bought Palm. Ultimately, HP said it was not prepared to commit the financial resources needed to maintain and build webOS as an ecosystem, and the decision to drop support for webOS devices was in keeping with the company's decision to spin off or sell its PC business to focus more on enterprise software and cloud computing. Palm could not give webOS a foothold in the market, and by the time HP rolled outs its new webOS devices, the platform was too far behind the market leaders to catch up. (For more: see this webOS timeline and webOS device slideshow.)
Nokia buying Symbian
How much: $381 million
What happened: Nokia (NYSE:NOK) announced in June 2008 that it acquired the remaining shares of mobile software licensing company Symbian from former supporters including Sony Ericsson and Motorola, and it created the open source Symbian Foundation to spur adoption of the platform. Since then, it's been mostly downhill for Symbian. At a time when Apple and Google were gaining market share, Symbian was losing it. Nokia did little to keep up, especially in the highly competitive North American market.
Nokia initially said it would rely on Symbian for mid-range smartphones and on MeeGo for high-end smartphones, but earlier this year incoming CEO Stephen Elop announced an about-face and said Nokia would use Microsoft's Windows Phone platform as Nokia's primary smartphone platform. In April, Nokia said it would slash 4,000 jobs and outsource its Symbian software activities to Accenture as part of its transition to using Microsoft's Windows Phone 7 as its primary smartphone platform. Elop committed to supporting Symbian through "at least" 2016, but then earlier this month Nokia confirmed it will stop selling both feature phones and Symbian-based smartphones in the United States and Canada as it gears up for the Windows Phone launch.
Meanwhile, research firm Gartner reported that Android's global market share in the second quarter leapt to 43.4 percent, up from 17.2 percent in the year-ago period, while Symbian's share fell to 22.1 percent, down from 40.9 percent in the year-ago period. Nokia's decision to take Symbian open source failed to halt its struggles in the smartphone market, and Nokia failed to innovate fast enough with Symbian. The company's decision to move to Windows Phone was a crystallization of that realization.
Microsoft buying Danger
What happened: Microsoft (NASDAQ:MSFT) bought Danger in February 2008, and folded the company behind the software and services on the T-Mobile USA Sidekick into its mobile business. The Danger acquisition gestated within Microsoft for a long time, but the main fruits of the deal became Microsoft's Kin social networking phones, which were whispered about as far back as 2008, under the codename "project Pink."
Officially announced in April 2010, Microsoft's Kin phones were aimed at young audiences and tried to bring together different social networking streams and enable content sharing. In May 2010, Verizon Wireless launched the Sharp-made Kin One for $49.99 and the higher-powered Kin Two for $99.99--both with a two-year contract and after a $100 mail-in rebate. Even though the phones were not technically smartphones, Verizon made customers purchase a $30 per month data plan with the gadgets. Microsoft didn't do itself any favors with the launch. The company said Kin phones would not offer access to its Windows Phone Marketplace application storefront, nor would consumers be given the latitude to customize their applications. Microsoft also unveiled a series of awkward TV ads for the phones that did little to explain their utility.
In late June, just weeks after launching the gadgets through Verizon, Microsoft pulled the plug on the project. Post-mortems would try to make sense of the debacle, but there was plenty of blame to go around: the blurring of the line between feature phones and smartphones (highlighted by Verizon's (NYSE:VZ) initial smartphone-style data plans for the Kin phones); a lack of enthusiasm internally at Microsoft for the project, when many were focused on Windows Phone 7; and a target demographic that never really got what the product was all about. Verizon brought the phones back in November 2010 without the data plan requirement, but the whole venture was a big flop.
Nokia buying Navteq
How much: $8.1 billion
What happened: Nokia (NYSE:NOK) bought navigation software developer Navteq in October 2007 in a bid to expand its services offerings. Nokia has tried to build out the service by acquiring other mapping and navigation elements. Nokia bought 3D urban modeling software developer PixelActive and crowd-sourced traffic alert solutions provider Trapster. Nokia also bought location-based advertising service provider Acuity Mobile for Navteq. Navteq maps now span 85 countries and territories on six continents, with approximately 20 million miles of roadway represented in the firm's database.
Despite all of the pieces, Nokia decided in June to revamp the Navteq business unit, and said it will integrate Navteq with its mobile social networking efforts to create a new Location & Commerce business. Nokia vowed its Location & Commerce unit will create consumer-centric social location products and applications, as well as platform services and local commerce solutions optimized for device manufacturers, software developers, Web services providers, merchants and marketers. Nokia's mapping business will live on though through Nokia's partnership with Microsoft (NASDAQ:MSFT), and the deal includes integration of Nokia's Ovi services, navigation and mapping capabilities into Windows Phone.
Still, Nokia is clearly taking a large financial loss on the original purchase. In the second quarter of 2011, the Navteq business posted an operating loss of around $160 million, narrower than the operating loss of $258 million it reported in the second quarter of 2010.