According to several news reports, Microsoft Corp. (NASDAQ: MSFT) made it into advanced discussions to buy troubled handset company Nokia Corp. (NYSE: NOK). Talks with other handset, personal computer and consumer electronics corporations are sure to follow. Nokia still has a large share of the global cellphone market, and all competitors of Apple Inc. (NASDAQ: AAPL) and Samsung continue to struggle as those two companies have taken control of the market. Major marriages of second tier players are the only way to remain competitive in market share.

A Microsoft deal would make a great deal of sense. It already has a strategic relationship with Nokia meant to spread the use of the Windows mobile OS. This operating system has a tiny market share compared to the Apple iOS and Google Inc.’s (NASDAQ: GOOG) Android, which has stormed the market and now holds the lead position in the mobile OS world.

Among smartphone manufacturers, Samsung is the global leader, with 32.7% of the market, followed by Apple at 17.3%, according to IDC. The other companies in the top five, each tiny compared to the leaders, are LG, Huawei and ZTE. HTC, which continues to suffer in the sector, does not make the list.

In the larger cellphone market, which includes products with many fewer features than smartphones, Samsung is also the leader at 22%, followed by Nokia at 19.1% and Apple at 7.5%. Also on this list, but well behind, are LG, ZTE, Huawei, BlackBerry, HTC and Motorola.

A Huawei buyout of Nokia had been rumored, but management of the Chinese company has denied it. However, a merger or acquisition of some sort would move Huawei beyond its primary market in the People’s Republic. It also would put the combined company’s global market share of the cellphone market at close to or better than Samsung’s. Huawei likely never will pick up sales compared to the Samsung and Apple, because the perception is that they have superior products. Huawei has no better path to an improved position than the buyout of another company in the industry. Its new Ascend P6 product has received good reviews, but the brand in not well known in the large U.S. market

LG is another possible buyer of Nokia. LG is among the largest companies in South Korea and almost certainly could afford to buy Nokia. LG holds the third position in many markets. It will not get beyond that without a strategic move to expand.

The final phone manufacturer likely to be a buyer of Nokia is HTC. It once was the primary challenger to the leaders in the smartphone sector. However, its sales have fallen. Its new HTC One is supposed to get its expansion back on track, but there is no indication that the product will be viewed as superior to the iPhone or Samsung Galaxy line.

Of course, there are constant rumors that Hewlett-Packard Co. (NYSE: HP) or Dell Inc. (NASDAQ: DELL) have shopped for smartphone makers. Each has lost the race in both the fast-growing tablet and smartphone sectors. But each continues to struggle in its own primary businesses, which them unlike buyers.

Nokia will be bought out. Its product plans have done no more than erode its position in the industry. Several companies need its sales, even if Nokia’s are not as strong as they used to be. The only path to the top of the smartphone and cellphone business is through a combination of one of more companies.

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