Microsoft Offers Windows Phone 'For Free' To Lower Manufacturer's Costs and Increase Market Share

Apr 2 2014, 7:32pm CDT | by

Microsoft Offers Windows Phone 'For Free' To Lower Manufacturer's Costs and Increase Market Share
Photo Credit: Forbes Apple

Windows Phone is free.

Let’s start with that phrase, because it’s about to get sliced and diced, it’s about to have a bundle of caveats,and  it’s not going to mean the bill of materials lie that says software will actually read $0.00. But that statement, coming out of Microsoft’s Build 2014 conference, is not only a clear in its intention, but it is also being repeated loudly around the tech reporting circles .

Of course the details count. While the licence will be free, that’s not the only software cost involved in a smartphone. There are patent fees to consider, there are the deals put in place with third party apps and services to have them bundled in the firmware, and there are countless ‘testing and certification’ systems that could easily add to the cost of a Windows Phone licence (and note this deal is any Windows Device with a screen under nine inches, so while Windows Phone is the big winner, smaller Windows 8 powered tablets will also benefitting).

Manufacturers will be looking at the small print in the contract, but the message is clear. Microsoft is moving towards a cloud-first approach, and their chief concern is to get people into the ecosystem and start using the cloud. That could be through MS Office for iPad, it could be through a new smartphone, or it could be through a cheap Windows 8 tablet.

Will this skew the marketplace for smartphones? Up until now, the choices were either a full licensing deal and the associated costs with Microsoft, or use the open choice of Android and deal with Google Play and the Open Handset Alliance. That choice has shifted now, and I suspect Microsoft will reap the benefit of this over the next year, and beyond.

Some will say it is too little, and too late, to compete with the rush of Android. That remains to be seen. While some territories are now at saturation levels with smartphones, and the easy profit and market-share of North America and Europe already divvyed up, there are huge tract of land and legions of users who have still to get their first smartphone.

That’s where Microsoft’s focus with Windows Phone should lie. Territories where a a $700 flagship handset is simply far too expensive , and the battle is all about the budget smartphones on sale in the $100-$200 range. That means a focus on lowering the bill of materials, and removing the cost of the operating system licence is going to have a significant impact on manufacturers.

As for Microsoft, they should finish up the purchase of Nokia’s Devices and Services division in the near future, and at that point the will be selling the vast majority of Windows Phone devices (over 92% at the end of 2013, reports AdDuplex). The licence would be part of the internal market, but not affect the bottom line coming out of Redmond.

By removing the licence fee, Microsoft level the playing field for manufacturers, they trade a relatively small short-term profit for a more attractive long-term position, and they create some good news and momentum around the Windows Phone platform.

I’m loving this move.

Microsoft's Biggest Hits And Flops

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

A Look At Apple’s Secret Keeping Machine
A Look At Apple’s Secret Keeping Machine
The famously secretive company makes silence an art form
 
 
China to produce its own 'Avatar'
Beijing, July 28 (IANS) China is preparing to produce its own 3D fantasy movie, based on romantic folklore, to make it an epic on par with the US blockbuster science-fiction movie "Avatar".
 
 
New Images Revealed iPhone 6 Motherboard
New Images Revealed the iPhone 6 Motherboard
The iPhone 6 logic board includes 802.11ac Wi-Fi module and NFC chip
 
 
Apple Keen in Entering into the Market of Mobile Payment Service
Apple Keen in Entering into the Market of Mobile Payment Service
Apple is discussing with a number of payment industry giants about the potential partnership for developing its own mobile payment service
 
 
 

Latest from the Network

Brazilian soccer standings
Rio de Janeiro, July 28 (IANS) Following are the standings of the Brazilian Serie A championship after the latest round of matches Saturday and Sunday (tabulated under matches played, won, drawn, lost, goals for, goals...
Read more on Sport Balla
 
2.5 bn smartphone users globally by 2015: US report
New York, July 28 (IANS) Nearly 2.5 billion people or 35 percent of the global population is expected to use smartphones by the end of 2015, says the latest report of US-based industry tracker Strategy Analytics. The...
Read more on Celebrity Balla
 
Ronaldinho on his way out: Jo
Rio de Janeiro, July 28 (IANS) Ronaldinho has probably played his last match for Brazilian club Atletico Mineiro, according to the star's teammate and close friend Jo. The 34-year-old has not contacted anybody at the...
Read more on Sport Balla
 
CWG: Indian paddlers lose to England in men's team semis
Glasgow, July 28 (IANS) India lost 1-3 to England in the 2014 Commonwealth Games men's team table tennis semifinal and will have to be content with playing for the bronze medal against Nigeria. The country's top...
Read more on Sport Balla
 
Dolly Parton would sing own songs in biopic
Dolly Parton would perform her own songs in a movie of her life. The 'Jolene' hitmaker doesn't want an actress to have the ''pressure'' of having to match her famous vocals in a biopic, so would allow them to lip-sync...
Read more on Movie Balla
 
Twin blasts in Nigeria kill five
Abuja, July 28 (IANS) At least five people were killed in two bomb blasts in Nigeria's Kano city, a mainly Christian area, Sunday afternoon, police said. The first blast occurred under a bridge in the Sabon Gari...
Read more on Politics Balla
 
Australia gives $5 mn for Gaza relief
Sydney, July 28 (IANS) The Australian government is providing five million Australian dollars (4.7 million US dollars) in urgent humanitarian assistance to Gaza, Foreign Minister Julie Bishop announced Monday. The...
Read more on Politics Balla
 
France wants expatriates to leave Libya
Paris, July 28 (IANS) French government Sunday called on all its nationals to quit Libya, "given the deteriorating security situation" prevailing in the African country. "All our nationals are invited to get in touch...
Read more on Politics Balla
 
Israel denies responsibility for UN school attack deaths
Jerusalem, July 28 (IANS) The Israeli army Sunday denied responsibility for the deaths of 16 Palestinians during Thursday's attack on a UN school in northern Gaza. "The inquiry as well as documented footage conclude...
Read more on Politics Balla
 
India lose badminton semi-final to England 3-0
Glasgow, July 28 (IANS) India lost to England 3-0 in the semi-finals of the badminton competition at the Commonwealth Games here late Sunday night. India's men's and mixed doubles teams fought well over three games,...
Read more on Sport Balla