Microsoft: We're doing cross-promotions, not paying OEMs $2.6 billion

Yesterday there was a rumor going around that Microsoft will give up to $2.6 billion to OEMs that support Windows Phone. Now the company’s head of communications is calling that number “complete fiction”.

The rumor was started by Eldar Murtazin who doesn’t have the greatest track record when it comes to these things. He claimed that a few OEMs that were coming back to Windows Phone in 2014 would get a big stack of cash from Microsoft. Out of those Samsung was supposedly taking the lion’s share with more than $1 bn in payments. On the face of it this makes sense, Microsoft trying to push WP hard by supporting manufacturers just like they did with Nokia.

However, Frank Shaw, Microsoft’s head of communications called these numbers fiction. In a tweet earlier Shaw said that Microsoft does indeed spend money on OEMs in co-promotions. We’ve seen the company do this a few times with Nokia and even HTC. However Murtazin is standing his ground saying that in fact the company is doing a lot more than promotions, they’re covering OEM’s R&D costs and helping them to switch to Microsoft’s OS in order to launch new devices.

 

Despite the company’s denial, and Murtazin’s somewhat horrible track record, this story may actually hold water. First, there’s a very strong incentive for Microsoft to pander to OEMs right now. With Nokia heading off into the sunset and the company’s current dominance in the Windows Phone ecosystem being transferred to Microsoft, the Redmond company runs the risk of being the only remaining Windows Phone OEM in the market, which could spell disaster, at least in some people’s eyes.

Then there’s precedent. Nokia received fixed sums of money every quarter for their continued investment and support of the platform. On top of that they did a lot of cross-promotions with Microsoft themselves. Sure Nokia was deemed a premium partner but now that that’s done why wouldn’t Microsoft try to entice other companies with some of the same perks?

Finally there’s the amount itself, $2.6 billion being a hell of a lot of money. But let’s take Samsung as an example and think about it. Giving Samsung more than a billion seems a bit insane, when even Nokia got less than that. And we all see the wonderful devices Nokia came out with whereas Samsung is nothing more than a footnote in the Windows Phone ecosystem. That’s a valid point, but turn the problem on its head and it suddenly looks different. How much money would Microsoft have to pay to get the biggest Android player on their side of the court? Suddenly paying $1bn for Samsung to flood the market with Windows Phones and take a small step back from Android doesn’t seem like such a big price. After all there’s no reason why Samsung couldn’t do the same for WP as it did for Android.

And of course this money doesn't actually have be to cash. It's likely that this will include discounted or free licensing on the OS, direct development support and other such perks that Microsoft is giving away for free. So even though the company is denying it, there’s a really strong possibility that behind the scenes a lot of cash and promises are being swapped between Microsoft and OEMs, all to ensure the future of Windows Phone.

Via: Unwiredview

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I believe if MS invested in stores in stores globally, and got Barnes and Nobles to sell Surface and Windows Phones, that would go a lot further than trying to get OEMs whose hearts are set on Android, to sell Windows Phones. One of the biggest things which has undermined Windows Phones sales so far, is MS' reliance on people who like Android. By this I mean OEMs like Samsung and HTC, as well as retail salespeople. MS should try and get one or more OEMs committed to selling WP and only WP, as well a retail network committed to selling Windows products, and not the competition's products as well.

Patmore Douglas said,
I believe if MS invested in stores in stores globally, and got Barnes and Nobles to sell Surface and Windows Phones, that would go a lot further than trying to get OEMs whose hearts are set on Android, to sell Windows Phones. One of the biggest things which has undermined Windows Phones sales so far, is MS' reliance on people who like Android. By this I mean OEMs like Samsung and HTC, as well as retail salespeople. MS should try and get one or more OEMs committed to selling WP and only WP, as well a retail network committed to selling Windows products, and not the competition's products as well.

The carriers shops are the worse, the people in them shps generally (in my experience) have a set opinion of WP from over a year ago, and haven't given it the time of day since, hence they are absolutely ignorant of the facts and capabilities of the OS and absolutely have no idea of the better ecosystem support.

Generally they say, if you like apps choose android because wp has hardly any (info from a while ago), but they totally fail to realise that the average user will gain more from the better experience of the UI on WP (better as in less cluttered, easier to use, doesn't stutter, fluid, smooth, novice friendly, gets stuff done easier etc.) than they would from the number of apps available on the android platform of which they will mostly use a very small number of and most are available on WP anyway.

They assume that the average user is someone that wants to get the phone home and play with it all night, installing loads of apps and downloading backgrounds and animated themes, ringtones, setting up multiple screens and generally treating it like a special evening in setting their phone up. Most people are not like this, they want a phone that lets them do stuff and do it easily, they want to use some apps of course and the vast majority of big apps are there on WP, they don't generally want to spend loads of time playing and customising a phone that is basically a tool to be used when needed.

when google pays an OEM to bundle any service are they not in fact helping fund RD costs elsewhere? the same can be said of anybody then.

this guy has a bad track record and he just got shut down by epic Frank

WP8 is right on the edge of becoming a legit respected 3rd option for mobile phones. It is good that they are pushing hard now.

It wouldn't surprise me if Microsoft pushed hard with their mobile platform.

Unfortunately, they're not providing what the masses want and probably won't ever due to the OS design.

The biggest attraction for a lot of people with samsung is not it's brand name, and it's not even the hardware. It's the frivolous fluff features they provide via their software.

When you've brought into the Samsung Windows Phone that's being pushed, the kids will be sat next to their friend with a android device watching the fish float by in the background and water droplets falling as they tap away at their home screen. The Windows Phone users will be lumped with some square blocks to rearrange. How exciting... they can't even put a background on it of their favourite hipster.

I love my Windows Phone, don't get me wrong, but I'm older and use my phone as a tool. The next generation of users are always going to be kids and young adults that you need to entertain before they become loyal to your product and they're quick to judge and jump ship if it doesn't look right in the eyes of their peers.

sagum said,
It wouldn't surprise me if Microsoft pushed hard with their mobile platform.

Unfortunately, they're not providing what the masses want and probably won't ever due to the OS design.

The biggest attraction for a lot of people with samsung is not it's brand name, and it's not even the hardware. It's the frivolous fluff features they provide via their software.

When you've brought into the Samsung Windows Phone that's being pushed, the kids will be sat next to their friend with a android device watching the fish float by in the background and water droplets falling as they tap away at their home screen. The Windows Phone users will be lumped with some square blocks to rearrange. How exciting... they can't even put a background on it of their favourite hipster.

I love my Windows Phone, don't get me wrong, but I'm older and use my phone as a tool. The next generation of users are always going to be kids and young adults that you need to entertain before they become loyal to your product and they're quick to judge and jump ship if it doesn't look right in the eyes of their peers.

the OS design argument is totally bogus given how much WP has been copied by the other two guys. it is a matter of access to the channel. if WP had beat android to the punch, android would be nowhere as everything consumers would ever see would be a WP set. it is the same de-facto non choice we see in the pc space.

consumers don't really choose android. they just buy something that happens to have it since it is the de-facto bundled OS with the handset.

MS can easily level the plain field by making WP free. but again this is no success as Linux has never made it against windows in the desktop space. so yeah. they'll have to pay to use it.

neonspark said,

the OS design argument is totally bogus given how much WP has been copied by the other two guys. it is a matter of access to the channel. if WP had beat android to the punch, android would be nowhere as everything consumers would ever see would be a WP set. it is the same de-facto non choice we see in the pc space.

consumers don't really choose android. they just buy something that happens to have it since it is the de-facto bundled OS with the handset.

MS can easily level the plain field by making WP free. but again this is no success as Linux has never made it against windows in the desktop space. so yeah. they'll have to pay to use it.

No he is pretty much spot on here. Windows Phone isn't customizable. My daughter refuses to use on because she can't "put a pic of my bf" as the wallpaper. and I was like... why do you want to make your device slow?

NastySasquatch said,

....

Show her a full width pinned contact that updates status.
Way better than some background that's hidden most of the time by apps.

Thanks for the input but here's my counter argument: I first reported the story and gave you the solid facts which we know are true. Then I logically analyzed the original rumor, compared to what we know goes on in the industry, precedents and market context and ended up with a logical assumption of what may be happening. I never claimed it was the absolute truth or that it's confirmed I just brought forth logical arguments as to why this - if it is happening- would make sense.

"Despite the company's denial, and Murtazin's somewhat horrible track record, this story does actually hold water. First, there's a very strong incentive for Microsoft to pander to OEMs right now. With Nokia heading off into the sunset and the company's current dominance in the Windows Phone ecosystem being transferred to Microsoft, the Redmond company runs the risk of being the only remaining Windows Phone OEM in the market, which could spell disaster, at least in in some people's eyes."

I'm sorry but using the term "Holds water"implies actual proof, not speculation and supposition.

Marketing money isn't anything new, look at all the MS ads that feature their partners hardware for example. From that angle it's same old business as usual. The bit about it being more like R&D I don't know, if they gave free support to help get new phones out faster then that should be covered in the OEM OS licensing deal. I think in reality it's marketing funds and waving the initial OS fee for a set amount of units to be made (first 400-500k for example).

I don't think Microsoft directly paying money to the OEMs directly like they did with Nokia. Its mostly free license, marketing, etc...

Microsoft should deal with other OEMs like Sony, HTC, LG, ZTE, Huawei, Micromax, Xolo etc.. rather than Samsung.
These OEMs sell huge number of phones as well. Also, they don't have their own OS like Tizen in the case of Samsung.

If all these OEMs can release 4-5 WP devices with combined marketing by Microsoft and OEMs they can easily sell 10-15 million WP devices per quarter.
Wider distribution, more devices and good marketing support is the best way to increase the market share.

With Samsung its just waste time, money and resources for Microsoft.

And why would an android user be interested in a windows phone? Even if it was made by Samsung?

People want what works, and what has all the apps they want, using a familiar interface. I can't see many android users jumping ship, even if the phone was free. Those that did would probably come back after a short time anyway.

dvb2000 said,
And why would an android user be interested in a windows phone? Even if it was made by Samsung?

People want what works, and what has all the apps they want, using a familiar interface. I can't see many android users jumping ship, even if the phone was free. Those that did would probably come back after a short time anyway.

most people don't buy an Android phone because of the OS. Most probably don't even know what OS their phone is running. The main reason Android is so popular is because it's running on so many CHEAP phones. So I think your assumption is dead wrong.
if ms can saturate the market with cheap phones like Android did, they have a good chance to get a large portion of the market

Stoffel said,

most people don't buy an Android phone because of the OS. Most probably don't even know what OS their phone is running. The main reason Android is so popular is because it's running on so many CHEAP phones. So I think your assumption is dead wrong.
if ms can saturate the market with cheap phones like Android did, they have a good chance to get a large portion of the market

This, it never fails to amaze me when I see android 'power users' assume that they are somehow a majority. Fact is most people I know that are not techy do not know what runs on their phone, they buy brand (they want that Samsung galaxy thing that everyone says is cool) or they want cheap, most don't use many apps and switching would be a non issue for them.

The power users that do use a lot of apps and like to dig around, possibly WP isn't going to suit them, but I also think there is a lot of misunderstanding surrounding WP now with the android folks, they think the app situation hasn't changed and isnt getting better to the point that the majority of big name apps are on WP.

Sure there will be plenty of apps unavailable on WP that some android users will 'need' - and will never come to WP due to the tighter controls and inability to side load (tick a box and install anything from anywhere from anyone for anything), but this is absolutely not MOST android users.

duddit2 said,
.... I also think there is a lot of misunderstanding surrounding WP now with the android folks ...

That's a two way street. I used the SGS4 the other day and I noticed android wasn't nearly as laggy as I was led to believe.