Should Microsoft buy Sony?

After seven years at Microsoft (NASD: MSFT) my wife left last week for HP (NYSE: HPQ) and so I will finally discuss my thoughts! I am on record with hundreds of students in my classrooms predicting that Microsoft would buy Nokia and then “should” buy Sony (NYSE: SNE). That was two years ago. Isn’t Sony too big? Sony’s market cap in Jan 2014 is ~US$19B while Microsoft is ~US$300B. That is a very doable size. The Sony brand and the Sony consumer electronics design capability could help Microsoft engage the consumer and compete with Google and Apple. However, Microsoft waited…a long time…they bought (part of) Nokia after a several year precipitous decline in handset market share. Following the same playbook, Sony’s handset share has fallen and now we see Microsoft and Sony working on a Windows Phone deal. A major obstacle to an acquisition is that Playstation and Xbox own too much of the gaming console market. Why not spin off the Playstation group and buy the rest of Sony?…or again wait around long enough and we will see Steam, Nintendo, and perhaps the TV makers steal enough gaming market share that regulators will allow PS and Xbox to combine. Microsoft needs to make some bold moves in the consumer space, else leave it for good and focus on the business side.