Steve Ballmer to Pay $230.00 Per Phone to Beat Google

[cereal killer]

As they say, success comes at a price, and Steve Ballmer is no exception to that rule. The question on investors minds was what was he willing to pay to beat Google and Apple at their game. Doing the math, that answer is now known, and it comes out to $230.00 per phone. Microsoft and Nokia are in a joint venture to gain market share for Windows phones in its battle with Google Android. Last quarter Microsoft payed Nokia $250 million and Nokia claims to have shipped 1 million units. It's not known how many units are still sitting in inventory but doing the math that breaks down to MS paying out $250.00 a phone. Part of the agreement stipulates that Nokia pays Microsoft a licensing fee for each phone it sells. The exact details of the license fee are not known, but some have speculated that it amounts to $20.00-$30.00 per phone. Essentially Microsoft payed Nokia $250.00 to receive $20.00 or $30.00. You see where this is leading? The Lumia 710 went for $50.00 on contract so it cost Microsoft $230.00 for that same phone that the customer just bought for $50.00.

You're probably wondering what the heck is wrong with Microsoft and how did they get to this point. First off with $50 billion in cash laying around, paying out $250 million is chump change for the software giant. Secondly, Ballmer recognizes that Microsoft has fallen way behind and a big price must be paid to catch up. They find themselves in a very precarious position because their life or death falls on Nokias shoulders. That's not a great position to be in, but here they are. They are banking on the high end Nokia Lumia 900 to compete in the market and make an impact. The Lumia 900 was a hit at CES. It was the talk of the show and blogosphere favorite. The handset is packing a serious punch with its: 4.3-inch ClearBlack AMOLED 800 x 480 capacitive touchscreen, 512MB RAM, 8-megapixel camera with a 28mm f/2.2 Carl Zeiss lens (dual-LED flash), polycarbonate-body, with a single-core 1.4GHz Qualcomm Snapdragon. A bonus, but not the biggest bonus, is that the handset will be packing an LTE modem. The biggest bonus lies in the fact that the smartphone will be offered at a mind blowing $99.99 on-contract. That low price is truly a game changer. Similar spec'd Android phones go for $199.99 on-contract and we all know how consumers love a great bargain. The stakes are high, and if Microsoft successfully pulls this off, Google just may have something to worry about.

Source: Forbes

[tjk629]

Personally I want to see WP7 rumble things up. Lord knows you won't be getting from RIM any time soon.

[combatmedic870]

I dont understand why they went with that processor.....if they wanted to make a rumble they should have went all out on a high end phone that people want and not on a high end phone that is....not. Ive heard great things about the OS and i bet it would have ran even better on a dual core second gen chip vs a gen3 single core snapdragon with an outdated 205 gpu.

I bet the camera rocks on that thing though. I really am liking the look of the phone!

[ntrddragn]

i dont think its the phone really, nokia phones are pretty solid. they have some of the features before android or iOS did. i think its the carrier. if we were truly in a free market where i can buy a phone and activate it on any network without contracts. i would grab me a nokia not to say i dont like my nexus. my old nokia 3310 took a beating and it was still ticking.

[npro1464]

...Can we flash Android over it?

It looks like a pretty decent handset, but I'm just not sure consumers want the tile thing and another closed mobile OS (I know I don't). Nokia makes a decent product, it's such a shame that they didn't give Meego a chance, because the N9 looks like a great phone and might be perfect if it was able to access Android apps. Inevitably, I think we'll see them put out some Android handsets. I really dont think WP7 is going to pan out.

[tjk629]

I dont understand why they went with that processor.....if they wanted to make a rumble they should have went all out on a high end phone that people want and not on a high end phone that is....not. Ive heard great things about the OS and i bet it would have ran even better on a dual core second gen chip vs a gen3 single core snapdragon with an outdated 205 gpu.

I bet the camera rocks on that thing though. I really am liking the look of the phone!

Not necessarily.

WP7 has a strict hardware requirement. I believe every single WP7 device runs a SnapDragon. My guess is MS won't allow dual core CPUs till they've made the OS takes advantage of it. For now anyways, a single core CPU is fine for WP7.

[gadgetrants]

I'm pretty fond of the "commoditization of Android" theory, which in a nutshell is "make LOTS and LOTS of Android phones, in different sizes, colors, and prices, and flood the market with them":

Android's branding paradox, and the fast track to commoditization | ZDNet

We can't conclude it's the main reason behind Android's skyrocketing market share in the last 2 years, but I'm sure it's helped a lot. And sometimes we forget that the high-end glamor phones that release at $200 or $300 (on contract) are for early-adopters like us -- but I'd guess the bulk of Android phone owners don't get their phone the first week it comes out. They get it when it's 6 months old and costs a penny at Wirefly, or it's free at Amazon. (Ever seen a 1-penny sale on last-year's iPhone?)

Really, Microsoft "subsidizing" phone cost is pretty much the same strategy, and I have to say, if they can keep Win8 phones well under $100 with hardware that rivals $200 Android phones, it will be a successful strategy. Whether they take over or not remains to be seen (I doubt it...I mean...those TILES!!!...), but I'd predict this time next year, we'll be saying, "Wow, Windows phones have caught on more than anyone expected."

EDIT: Regarding single vs. dual-core (from Wikipedia):

Windows Phone - Wikipedia, the free encyclopedia

Windows Phone 8: codename Apollo Apollo is the codename for next generation of Windows Phone, as confirmed at an MSDN seminar in August 2011.^[35] It is expected to launch in mid-2012 and Engadget believes that Apollo actually refers to Windows Phone 8.^[36] It is believed the update will add NFC technology, dual-core chipsets support, higher-resolution screens to the platform, and eventually lead to a convergence of Microsoft's operating systems for PCs, phones, tablets,^[37] and video game consoles seeing as the Xbox 360 also uses the Metro interface. It is speculated that Microsoft plans to move Windows Phone kernel from Windows CE into the isolated Windows core informally called MinWin that is the basis of Windows 7 and Windows 8, by rearranging APIs for both Windows and Windows Phone.^[38]

-Matt

[johnomaz]

I've heard that WP7 phones are actually pretty damn good. The OS is great and the hardware works very well. I haven't used one and I like my Android but I have nothing against WP7 or iOS. I'd love to get a WP7 phone for work, but I doubt that will ever happen.

[brad92]

My friend has a Windows Phone and its pretty cool. Its an HTC with slide out speakers.

X

[cereal killer]

I'd predict this time next year, we'll be saying, "Wow, Windows phones have caught on more than anyone expected."

I predict this time next year Windows will be threatening to become a major player in the market. A few reasons why I believe this to be true. First, Nokia makes an EXCELLENT phone both in build quality and aesthetics. Secondly, the price point. Lastly, the $230 million Microsoft and it's partners are going to throw into advertising.

As a side note HTC is also coming out with a stellar Windows phone. The Titan II is an awesome piece of equipment for $199. To rule Windows smartphones out entirely is something I cannot do in good faith.