updated 10:00 am EDT, Fri August 27, 2010
Microsoft to put half billion in marketing WP7
A leak late Thursday hinted that Microsoft is slated to spend $500 million just on marketing for the Windows Phone 7 launch. One source understood that $1 billion was being spent on the fall release, only half of which was actually focused on development. Microsoft hasn't confirmed the amount, but Deutsche Bank estimated for TechCrunch that it was at least $400 million, not including direct financial incentives to phone manufacturers.
Microsoft executives told the analyst that they would spend "billions" in the first year on both selling and developing WP7.
The expenses would be part of a large effort to revitalize Microsoft's collapsing mobile efforts. Even before unveiling WP7 in February, the company had lost much of its share to the BlackBerry, iPhone and Android devices. Many of the companies that had once been loyal to Windows Mobile have since dropped it partly or completely in the past year as it became a drag on their performance compared to Android. HTC and Motorola in particular profited the most from dropping Microsoft in favor of Google.
Even with a major improvement of its OS, Microsoft may face difficulties getting support. Of the launch partners, only HTC, LG and Samsung are still genuinely committed, Deutsche Bank said. Dell, Garmin-ASUS, Sony Ericsson and Toshiba still have WP7 plans, but most of their attention is now on Android. HP's acquisition of Palm has left it focusing on webOS and has tossed aside WP7 as a result.
The company has not only turned to paying for phone development costs but to incentivize app developers by providing guaranteed income for WP7 apps even if the Windows Phone Marketplace fails during the same period. Apple and Google have provided minor incentives such as developer phones or simple promotions, but they have had enough interest on their own for many to come voluntarily.