ZTE reveals cost of Windows Phone OS licensing

Chinese smartphone manufacturer ZTE has officially launched its ‘Tania’ Windows Phone, after first announcing it back in September. The budget-friendly device looks set to bring Microsoft’s mobile operating system to new price points in the market, but the challenge of reducing the cost of Windows Phones was highlighted by comments made by a ZTE executive yesterday.

Speaking at the Tania’s UK launch in London, Santiago Sierra, Portfolio Manager for ZTE UK, explained to Trusted Reviews that the cost of licensing the OS from Microsoft results in higher pricing for its Windows Phones than for its Android devices. So far, manufacturers have remained tight-lipped on the exact amounts that they pay to Microsoft for each OS licence.

Sierra revealed that ZTE actually pays Microsoft around £15-£20 GBP ($23-$31 USD / €18-€24 EUR) for each Windows Phone licence. This is a good deal higher than expected; it had been widely assumed that OEMs paid roughly $10-$15 USD (£6.50-£10 GBP / €8-€11.50 EUR) per handset.

Given that Android is free for OEMs to install on their devices, it’s not difficult to understand why so many manufacturers have favoured this option over the costly Windows Phone licensing route. However, things are of course not quite so clear-cut, given that many Android manufacturers are still paying up considerable sums to Microsoft – and others – for patent licensing; this makes the Android vs Windows Phone argument a bit more complicated than “free vs paid-for”.

Even so, it’s interesting to finally get a (hopefully) reliable figure from a manufacturer on the true cost of licensing Microsoft’s OS, and it puts into context the difficulty for manufacturers of delivering low-cost Windows Phones to the market.

However, it’s worth considering the fact that ZTE isn’t a major player in the Windows Phone space yet, so it may well be paying more for its licences than much larger manufacturers. OEMs selling handsets in greater quantities – and therefore purchasing Windows Phone licences in greater volumes – are likely to enjoy discounts on their licensing costs for each handset, so the amount that HTC or Samsung pay to license each handset is almost certainly lower than the price that ZTE pays.  

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One thing on testing: lets not forget Samsung, who screwed up the NoDo update by changing their hardware from what was approved by Microsoft to something else for manufacturing. That update should've been a lot smoother than it was

Its interesting to read. I will say that the cost of engineering for Android should be something they can spread across multiple phones (and generations of phones). So, in theory, once you get enough phones sold it's cheaper than the per-phone software licensing Microsoft is asking for. Additionally, Android is more carrier/OEM friendly than Windows Phone 7.

* There's no mandatory hardware minimum/specs like WP7 has. So while they can make a super high-end Android, they're also free to make a super low-end unit if a carrier wants it.

* Conversely, because there's no spec guidelines, they can go crazy with their top-end Android handsets. HDMI? Sure. 3d? Go ahead. Netbook dock? Absolutely. There's tons of ways for high-end Android handsets to distinguish themselves and (hopefully, for the OEM), lock you into buying their phone.

* There's no mandatory update policy, so OS updates can be used to artificially create distinctions between similar hardware or forced/premature obsolescence.

* OEMs and carriers are free to customize Android as they wish. UI being an obvious area, but also bundled programs. Sadly, like the Windows OEM market, I worry there's too much crapware being loaded onto phones that can't be conveniently removed ala Windows Phone.

I love the Windows Phone, but licensing aside, there are definitely opportunity costs associated with it. Its harder to stand out because there's less that an OEM or carrier can do with it. They all look and act mostly the same, which is a pro for me as a consumer but not for them. Crapware is removed quickly and easily, so there goes a possible revenue stream/point of customization. OEMs and carriers can skip one update, but all updates are cumulative, so the OS version can't be leveraged on users.

WP7 is in a weird spot between iOS and Android in that it has some of the advantages of both, but not in a way I find overly compelling. I can't recommend it to my techie friends because Android is really the best choice for them. My non-techie friends have a lot more to gain by going with iOS with its massive peripheral aftermarket. Its almost like WP7 has to catch your eye, your fascination, in order for it to be a worthwhile recommendation. If it clicks and you "get it," its awesome. But otherwise? I find it hard to recommend to people and I love it to bits @_@

It could be worse, they could have to hire a full development staff to adjust and build/compile Android, which gets expensive quick when they have to manage updates to the devices. (Which is why most have stopped providing Android updates.)

Android is free, but that doesn't mean there isn't a lot of work by the internal development teams to get drivers and other aspects running on the hardware, and the whole build and test process, which brings its costs up higher than the Windows Phone 7 licenses, as Samsung and other have stated and repeated and stated time and time again.

Having to worry and experiment with specs, extra work needed to check everything works, extra work for every update, drivers, manpower on payroll for all of that, having to worry about patents.. That has it's own price, right?

You know what's the difference? I have a Galaxy S device and I got it when it was version 2.3 now its version 2.3.3 which is the same thing with some bug fixes. People who bought HTC HD7 now got Mango and so on ...
Every good thing comes with a price

S3P€hR said,
You know what's the difference? I have a Galaxy S device and I got it when it was version 2.3 now its version 2.3.3 which is the same thing with some bug fixes. People who bought HTC HD7 now got Mango and so on ...
Every good thing comes with a price

Are you getting Ice cream sandwich? HTC HD7 owners will get Tango and Apollo.

With android being so free, you'd think it would be easy for OEMs to upgrade if it wasn't for everything mentioned in the comments above.

Any phandroid will tell you it's easy to install custom roms and have whatever OS you want.
Except those ROMs wouldn't work without a ton of testing from the people who invest time for no monetary gain.

dotf said,

Are you getting Ice cream sandwich? HTC HD7 owners will get Tango and Apollo.

With android being so free, you'd think it would be easy for OEMs to upgrade if it wasn't for everything mentioned in the comments above.

Any phandroid will tell you it's easy to install custom roms and have whatever OS you want.
Except those ROMs wouldn't work without a ton of testing from the people who invest time for no monetary gain.

That was exactly my point. when samsung announced there is no IceCream sandwich for galaxy S I was so ****ed off since I got my phone 6 months ago and I am already done getting updates. However HD7 is for last year and they still get Mango and Apollo and ...
This is the real difference

Microsoft are already taking in a $15 royalty from OEMs that use Android from patents. So the $15-20 Windows Phone OS price tag isn't that much more, especially for the likes of Samsung etc who've already signed up.

sagum said,
Microsoft are already taking in a $15 royalty from OEMs that use Android from patents. So the $15-20 Windows Phone OS price tag isn't that much more, especially for the likes of Samsung etc who've already signed up.

Yeah, plus the Google Apps license, the development costs, the lawsuits from Apple and the like, etc., etc... It adds up. I'd wager that in the end Android works out to be considerably more costly than Windows Phone.

Supporting Android is NOT free. You have to employ the development team that makes the skins and works on OS bug fixes and updates. That isn't cheap.

Wombatt said,
Oooh, this is interesting news.
Easy to see why manufacturers have gone with Google's Android OS.

^ check above comment

Wombatt said,
Oooh, this is interesting news.
Easy to see why manufacturers have gone with Google's Android OS.

Because hiring a developer team is free.

Coi said,

Because hiring a developer team is free.

But it can't be that expensive! It is several hundred million dollars in licensing fee by Microsoft, for large OEMs like Samsung and HTC.

You cannot compare Android and Windows Phone in this way. Android OEMs have to write their own drivers. MS supplies most if not all of the drivers for Windows Phone. Google services aren't free, and they are expected on Android phones. Updates are done by MS, OEMs don't need to do the amount of work required for Android updates. And finally you have to pay licensing fees for patents that Android infringes. I think in the end Windows Phone comes out cheaper.

floopydoodle said,
You cannot compare Android and Windows Phone in this way. Android OEMs have to write their own drivers. MS supplies most if not all of the drivers for Windows Phone. Google services aren't free, and they are expected on Android phones. Updates are done by MS, OEMs don't need to do the amount of work required for Android updates. And finally you have to pay licensing fees for patents that Android infringes. I think in the end Windows Phone comes out cheaper.

^This.

People think that if something is open source, OEM just takes the code, makes a custom skin and puts it on the phone. WRONG. Development, testing, design, testing, testing, bug fixes, testing,..... That costs a lot of money, people. Stop being be so narrow-minded. Why do you think Android phones are usually left with zero to maybe two (top tier phones) updates? That's right, because it costs a lot of money to adjust the custom-written code for the new Android release.

floopydoodle said,
You cannot compare Android and Windows Phone in this way. Android OEMs have to write their own drivers. MS supplies most if not all of the drivers for Windows Phone. Google services aren't free, and they are expected on Android phones. Updates are done by MS, OEMs don't need to do the amount of work required for Android updates. And finally you have to pay licensing fees for patents that Android infringes. I think in the end Windows Phone comes out cheaper.

Agreed. I find it very odd that this is always left out...

floopydoodle said,
You cannot compare Android and Windows Phone in this way. Android OEMs have to write their own drivers. MS supplies most if not all of the drivers for Windows Phone. Google services aren't free, and they are expected on Android phones. Updates are done by MS, OEMs don't need to do the amount of work required for Android updates. And finally you have to pay licensing fees for patents that Android infringes. I think in the end Windows Phone comes out cheaper.

^this.
Yet another Neowin news full of mistakes.

Anthonyd said,

^this.
Yet another Neowin news full of mistakes.

The article does actually make clear that it's wrong to view Android vs Windows Phone as "free vs paid-for", because Android requires additional licensing that isn't covered by the OS. It does help to read the articles before commenting on them.

floopydoodle is quite right about the extent to which Android OEMs find themselves exposed to such additional licensing costs; whether licensing Windows Phone is cheaper is debatable, as we don't know how much additional licensing manufacturers pay per Android handset.

gcaw said,

The article does actually make clear that it's wrong to view Android vs Windows Phone as "free vs paid-for", because Android requires additional licensing that isn't covered by the OS. It does help to read the articles before commenting on them.

floopydoodle is quite right about the extent to which Android OEMs find themselves exposed to such additional licensing costs; whether licensing Windows Phone is cheaper is debatable, as we don't know how much additional licensing manufacturers pay per Android handset.


The article says "Given that Android is free for OEMs to install on their devices, it's not difficult to understand why so many manufacturers have favoured this option over the costly Windows Phone licensing route", sorry but this is plain wrong. It costs a lot more money to hire the engineers to build the customisation to Android (including drivers for example) than buying the MS licence. The main difference is that MS is only supporting few hardwares, where Android can potentially be modified to work on all hardware. That's the main reason for manufacturers to build Android device, so they can keep their current hardware setup.

FMH said,
No wonder the OEMs love Android over WP.

It's only $18-$26 more expensive than Android and a lot better quality OS.

Enron said,

It's only $18-$26 more expensive than Android and a lot better quality OS.


Quality doesn't matter to these OEMs, they are only after profit. And $31 per device, is a lot!
If they were selling WP instead of Android, it would have amounted to several billion dollars in licensing fees.

FMH said,
No wonder the OEMs love Android over WP.

Well there was a discussion when Android manufacturers to MS royalties cropped up that they would be forced into looking at their own OS' or focusing more on WP7 devices. But with these royalties and Googles cut for the GApps package that they are basically on par with WP7 licensing (Cheaper for those not currently paying royalties). I guess it comes down to consumer preference as to what manufacturers focus on.

Hollow.Droid said,

I guess it comes down to consumer preference as to what manufacturers focus on.

On most part true, but manufacturers only focus on profits.

Enron said,

It's only $18-$26 more expensive than Android and a lot better quality OS.

AND they have little or no necessary development costs as opposed to Android...

It's just nowhere near as simple as the article tries to make it out to be.

FMH said,

On most part true, but manufacturers only focus on profits.

What about Apple lawsuits? I'm sure there's a cost for that too.

FMH said,
And $31 per device, is a lot!

Seriously? People spend substantially more on farting (and similarly useless) apps for their smartphones than the cost of the smartphone OS itself!

Nas said,

Seriously? People spend substantially more on farting (and similarly useless) apps for their smartphones than the cost of the smartphone OS itself!

Sure. But the OEMs are different. They want every dollar they can get.
For instance, Samsung sold 100 million smartphones in 2011. If they gave $31 on every device, it amounts to a colossal $3.1 billion!

FMH said,
No wonder the OEMs love Android over WP.

You think developing and maintaining all those custom Android interfaces to get a half-decent experience and hardware drivers come for free? That's probably the reason why only a select amount of devices are being updated to the next major version, while the rest can bite the dust after less than a year.

yeah, well... i dont care if its 10$ or 50$; high category devices cost the same no matter they run android or wp7 so as an end user theres no difference for me

for the oems i actually dont care one bit if their profit is plus or minus 20-30$ and dont think anyone shoud

Morden said,
yeah, well... i dont care if its 10$ or 50$; high category devices cost the same no matter they run android or wp7 so as an end user theres no difference for me

for the oems i actually dont care one bit if their profit is plus or minus 20-30$ and dont think anyone shoud

I don't think that most people do care in terms of feeling the company's pain. However, I do care because the less profit that they make, then the less phones that they are likely to produce with the OS, if they can make a phone with a similar-purpose OS for less. I expect that manufacturers probably negotiate the amount based on volume, as I imagine that ZTE is not a prime manufacturer of Windows Phones.

Others bring up a good point about development costs related to Android for their phones along with paying for the Google experience, but regardless of the OS, these manufacturers will likely have to write drivers for any given OS to interface with their hardware. Of course, that's pretty moot as everyone has to do it and I imagine that Microsoft's facility provides a better handling for it, but I did want to mention that development is not free once they get the Windows Phone license--there is still some extra cost for them on top of it, though almost certainly nothing on the scale of what they do with reskinning Android and such.

Albert said,
... and there are idiots that actually think apple tax is expensive. what is this world coming to. tsk tsk tsk.

Somehow I think most people consider the "Apple Tax" a lot more than just £20

Albert said,
... and there are idiots that actually think apple tax is expensive. what is this world coming to. tsk tsk tsk.

Is this another Joey S?

Albert said,
... and there are idiots that actually think apple tax is expensive. what is this world coming to. tsk tsk tsk.

The Apple tax is 4x's the cost. Need proof? 32Gb of Nand Flash cost at its lowest $30 each on retail. Which we know retail price is higher than OEM price. So that means Apple is paying 1/2 that or even less. Yet they charge $100 per 32GB...Actually even more. The iPhone comes as 8, 16, 32 and 64 and so does ipod Touch. The 8GB iPhone cost 99.00, the 16Gb doubles to 199.99, 32 is 299.99 and 64 is 399.99 on contract. With contact they are 599,699,799,899 for iPhone and 199,99, 299,99, 399,99 for iPod.

You really thin the calling hardware takes the cost of the iPod and doubles it?
Look at the Mac's. I can by a PC with a faster CPu, more RAM, equal or better GPU more storage and ahve a computer that offers more apps and more devices thatw ork with it for as much as $500 less vs a Mac.

The Apple Tax is way higher if you consider the facst and not look at Apple with fanboi distortion.

TechieXP said,

The Apple tax is 4x's the cost. Need proof? 32Gb of Nand Flash cost at its lowest $30 each on retail. Which we know retail price is higher than OEM price. So that means Apple is paying 1/2 that or even less. Yet they charge $100 per 32GB...Actually even more. The iPhone comes as 8, 16, 32 and 64 and so does ipod Touch. The 8GB iPhone cost 99.00, the 16Gb doubles to 199.99, 32 is 299.99 and 64 is 399.99 on contract. With contact they are 599,699,799,899 for iPhone and 199,99, 299,99, 399,99 for iPod.

You really thin the calling hardware takes the cost of the iPod and doubles it?
Look at the Mac's. I can by a PC with a faster CPu, more RAM, equal or better GPU more storage and ahve a computer that offers more apps and more devices thatw ork with it for as much as $500 less vs a Mac.

The Apple Tax is way higher if you consider the facst and not look at Apple with fanboi distortion.

Ok fanboi distortion comment, FUNNY!

I don't think the "tax" is the problem, Apple sets their PROFIT margin very high, so yeah you can call it a "tax" but it's more GREED than anything else, one reason I NEVER bought a Macbook or any Mac computer... I am not paying that much for a computer, when as you say.. Intel / windows were MUCH cheaper (not NOT proprietary either)

"...that Android is free for OEMs to install on their devices..." I was under the impression they had to actually pay to get the "Google" experience on them - the marketplace, music, etc. Which applies to to basically every single mass market phone OEM - none of the ship a "free" version of Android

I suppose with Windows Phone there's the added benefit of Microsoft continually putting out and testing OS updates for you as well (helped by the amount of restrictions MS places on the device customisation)- whereas with Google they dump the OS code on a repository and then expect you to sort it out for yourself.

~Johnny said,
"...that Android is free for OEMs to install on their devices..." I was under the impression they had to actually pay to get the "Google" experience on them - the marketplace, music, etc. Which applies to to basically every single mass market phone OEM - none of the ship a "free" version of Android

I suppose with Windows Phone there's the added benefit of Microsoft continually putting out and testing OS updates for you as well (helped by the amount of restrictions MS places on the device customisation)- whereas with Google they dump the OS code on a repository and then expect you to sort it out for yourself.

Exactly. They still have to pay for a license for the Google Docs AND they then also have development costs too... I always love how both of these costs (Which are substantial) are forgotten...

M_Lyons10 said,

Exactly. They still have to pay for a license for the Google Docs AND they then also have development costs too... I always love how both of these costs (Which are substantial) are forgotten...

Yes, and don't forget they have to pay royalties to Microsoft (values believed to be around 10-15 USD).

M_Lyons10 said,

Exactly. They still have to pay for a license for the Google Docs AND they then also have development costs too... I always love how both of these costs (Which are substantial) are forgotten...

Not only that but the patents; h264, aac, mp3 to name a few. Either pay Microsoft $25 per unit or negotiate with the numerous patent holders.

sviola said,

Yes, and don't forget they have to pay royalties to Microsoft (values believed to be around 10-15 USD).

That's just foolish talk there has NEVER been royalty fees paid to MS.. NEVER.

Shareware has been around for MANY years, MS never asks for a DIME to develop..that's how MS got this big in the FIRST place, because they knew it meant more OS licenses..

sviola said,

Yes, and don't forget they have to pay royalties to Microsoft (values believed to be around 10-15 USD).

That's just foolish talk there has NEVER been royalty fees paid to MS.. NEVER.

Shareware has been around for MANY years, MS never asks for a DIME to develop..that's how MS got this big in the FIRST place, because they knew it meant more OS licenses..