>>Microsoft is a high-volume hardware company - keyboards, mice, webcams, Xbox etc. but they're not an ultra-high volume hardware company like Nokia. I believe Nokia's unit volume is of the order of 500M/year, I don't think anything MS makes exceeds 1/10 of that.
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>I would say that Microsoft is a software company that happens to sell some hardware, mainly accessories, with that hardware having little direct result in the bottom line revenue. Just as Intel happens to have some software products, it's considered a hardware company. Things like mice, keyboards, and webcams are hardware accessories that have no software within them. Xbox hardware actually results in major losses in revenue annually, bu the profits from the Xbox software, software licensing, Xbox Live, etc. all make profit that justifies the loss in hardware revenue. And as you may know, Microsoft lost well over billion dollars (behind the loss per Xbox unit sale) on all the recalls to fix the hardware problems (well over half of Xbox 360 customers had to send in their device to be repaired at least once, many multiple times).
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>I would consider the new Kinect device an accessory for the Xbox, but may expand to be an accessory to Windows devices eventually. The Zune devices, created by Toshiba for Microsoft, is being phased out as a failed hardware product line, with the Zune brand and existing service set to be rebranded/renamed soon. So in the few hardware devices Microsoft has sold that host it's own software platform, the hardware device itself has either lost money per device sale or has failed as a product line. The primary reason Microsoft does any hardware is to support their software product line and strategy.
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>There has been speculation for years that Microsoft might come out with a portable gaming device, like the PlayStation PSP/GO line and the Nintendo DS, back to the Game Boy days. The main reason Microsoft hasn't done this is because they don't want a device like this to eat into the sales and strategy of their existing Windows, Windows Phone/Mobile, and Xbox platforms. Ballmer continues to bet the company on Windows. While Windows 8 is going to have the WinPhone 'metro' UI as the default interface (biggest bet/risk since going from DOS to Windows), it's my prediction that Windows Phone will eventually be replaced with a lite version of Windows itself. I expect Silverlight will be removed completely as a strategic technology and simply remain as a browser plug-in for those who happen to want to use it, with the scenarios for it decreasing rapidly (but this is a whole other topic).
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>Aside from the hardware side of Microsoft, the real issue around Nokia is the partner related business model Microsoft depends on. There is no evidence Microsoft is considering or ever would want to own their own hardware wing for phones (or PCs) because they depend on multiple hardware partners who they license software to. When Microsoft has been asked about making a Microsoft branded PC or phone, it's always been responded to that Microsoft relies on it's hardware partners, and is a software company. And on the topic of the possibility of Microsoft buying Nokia hardware division, I'd say the likelihood of that happening is less than 1% chance.

I think the chances of MS buying Nokia are the same as the chances of MS changing its entire strategy. MS in software is currently like ARM in hardware, happy to license its products to almost anyone. The other model is Apple, don't license to anyone, maintain a monopoly. Hybrid models have been tried a few times, I can't think of any that have been successful.

A monopoly is splendidly profitable if you have the best (real or perceived) products, like Apple. But it would be very risky for MS to switch to that model for phones/mobile.