Finally a rumor that makes sense.

Microsoft is supposedly about to start talks to purchase Nokia's mobile division.

http://www.engadget.com/2011/05/16/eldar-murtazin-microsoft-will-enter-negotiations-to-buy-nokias/

I don't think Windows phone will be any competition for iOS or RIM or Android while its handsets are being produced by third parties with only a single foot in the door.

This move would allow Microsoft to compete head-on with Apple for the big money, leaving everyone else to pick up crumbs. On top of that they'd still be getting fat royalties (relatively speaking since it's all just patent gravy) from all the other parties even if they stopped licensing their OS, since such a move would only expand their patent portfolio (that some handset makers have already conceded Android is infringing upon).

It's a good thing that Yahoo deal didn't go through, this makes much more sense. At least conceptually. I don't know what the numbers are going to be like for an acquisition, nor how much of Nokia would be up for grabs (NAVTEQ included?).

I don't see how MS is going to be anything but a marginal player with marginal profits licensing WP7 and its successors to third parties. They don't currently have the same level of opportunity that Google does to turn unit share into additional revenue streams (mostly advertising via in-app and search). The licensing fees collected from third parties have got to be pretty small compared to the kinds of money Apple makes selling devices.