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Microsoft might drop Windows Phone and Windows RT licensing fees

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The Verge is reporting that sources close to Microsoft have indicated the company is seriously considering making Windows Phone and Windows RT available to device manufacturers free of charge. Microsoft would most likely move to a free licensing model with the upcoming “Threshold” update, the next major Windows update rumoured to bring back the Start menu.

The majority of Windows revenue currently comes from licensing Windows 8 and Windows RT to OEMs. However, Microsoft’s recent acquisition of Nokia’s handset division virtually eliminated any significant Windows Phone licensing revenue, as the Finnish manufacturer was responsible for 80% of all Windows Phone shipments.

To be honest, Microsoft needs the networked benefits of a popular operating system more than it needs the licensing fee revenue. A free OS is likely to attract more OEMs to the platform, which will lead to greater consumer choice and (hopefully) a larger share of the smartphone marketing. This larger installed base is crucial for attracting AAA app developers to Windows Phone.

If Microsoft is serious about becoming a viable 3rd mobile computing platform, it will follow Android’s path to success and drop the Windows Phone and Windows RT licensing fees. The potential benefits outweigh the risks, and the company is already making $2 billion a year in Android patent fees anyway.

SourceThe Verge
  • Tom Adams

    But Android is so refined now I fail to see OEMs having any interest in supporting another platform

    • mwahahahaha

      HAHAHAHA !!!!!!!

    • Super_Deluxe

      But it’s so hard to compete with OEMs like Samsung and HTC that it might be a better option to resort to Windows phone even though it’s not strong in sales. Unless that OEM makes a much better hardware than Samsung I’m talking specs and build quality.

    • Cormang

      Android is refined?
      Regardless, numerous OEMs such as Samsung have already indicated they are leaving Android. In Samsung’s case it’s Tizen.
      The mobility war is just beginning…

    • AlphaEdge

      Tizen will be a niche product, like Bada before it.

  • Rich

    Not sure there’s any other major company out there that is so out of touch with the consumer.

    edit: Actually, maybe BlackBerry holds that award.

  • Mythos88

    “If Microsoft is serious about becoming a viable 3rd mobile computing platform”
    Maybe you should try to be more in tune with what is going in internationally. Sure WP is not viable in Canada but in the grand scheme that doesn’t mean a whole lot. However Windows Phone doing increasingly well internationally. It has passed critical mass and is near 50 million users. It is trending to overtake iOS in Europe within a year and is already ahead of iOS in dozens of countries.

    • Blueliner

      As an Android user.. I have a hard time believing that is true. You must be part of the most extreme sect of the hardcore MSFT fanboys.

    • wes

      As an android user, I’m seriously considering WP. Especially the nokia 1320. Good price 6″ phablet. vs way over priced android phablets.

    • Blueliner

      Nokia has great hardware.. i’m just not sure if WP can overtake iOS that easily (as much as I dislike Apple)

    • wes

      Not take over, but in parts of europe WP is close to overtaking iOS.

    • Tom

      You can’t compare the low-end market (where WP has the most gains) to the high end market (where iOS still reigns supreme). Most WP buyers opted for phones like the Lumia 520 because iPhones are too expensive for them, and WP also offered a refreshing alternative to the god-awful performance of Android on low-end specs.

      Blueliner was saying that iOS isn’t threatened, and he’s right. If WP’s gains really were a threat, then Android would have made iOS irrelevant years ago.

    • wes

      Good points. I want to see what the Moto G does to the low end market share. Its kinda hard to find a phone that’s better priced at that price range.

      I’d only be worried if I were Apple if all service providers dropped subsidies (maybe AT&T, T-Mobile already), and all the other OEMs dropped their prices to roughly what the Moto G and Nexus 5 (Google price) are selling for.

    • Tom

      It’ll certainly make some disruptions in North America. But if it’s not officially distributed in the emerging markets (the Nexus 4 and 5 weren’t), then it could end up selling for highly inflated prices there (just look at the Nexus 4 costing over $800 USD in Brazil). Nokia on the other hand officially distributes its lower-end Lumias in most markets and ensures low prices across the board.

      I did hear that the Moto G will see wider distribution than the Nexus, though, so it’ll probably fare well.

    • wes

      Things gotta start from somewhere. I’m happy i’m in a country that had a few options that don’t try to gouge me. No way i’m willing to pay for a phone that costs close to my personal computer (surface pro 128 gb @ 675$ + tax).

    • wes

      Search for WP market sales share (oct).

      Italy has 16.1 WP vs 10.1 iOS
      Germany, Great Britain has tripled in WP over the last year and iOS has dropped
      France is at 12.5 WP vs 15.9
      Spain is tied with 4.3 each

      Euro (5 countries) 10.2 WP vs 15.8 iOS.

      WP is rising, and iOS is dropping.

    • Blueliner

      You bring a well very well rounded argument with facts, but OP just overgeneralized that iOS will fall off in Europe as a whole. And I find that to be a little too exaggerated..

    • wes

      iOS has its place, but I’m interested to see what AT&T does with their subsidies. Not sure people really wanna fork out 650+$ for an iPhone. I think that Motorola/Google is really driving prices down, and I’m grateful for that.

    • Tom

      Again, the numbers come from differing demographics. WP’s sales in the iPhone-price segment are actually worse than BB10′s in many markets. As long as people who can afford iPhones choose iPhones, then iOS isn’t going anywhere.

    • wes

      I’m not saying that WP is equivalent to iOS, but percentage wise, it’s something not to be scoffed at. Personally I think WP gives a pretty good user experience, and as in most phones, I think the price range is “right” for what you’re getting (a phone to call, text and surf the internet on).

    • Plazmic Flame

      Nope, Mythos88 is actually speaking truth. I use to be as ignorant as this article and most people who haven’t seen Windows Phone in our close circles but after a visit to the Philippines (a place that had BlackBerry devices left, right and center 2 years ago) I was shocked to see so many Windows Phones! Especially the yellow neon color. If this place has so many, I can only imagine it’s more widespread in other international places outside of the US and Canada.

    • Tom

      You need to see how big the low end market segment is outside North America (talking about sub-$200 phones here). Windows Phone has conquered that segment because it does perform better than Android on low-end hardware (KitKat is addressing this, but isn’t out for such phones yet).

      For MIDRANGE and HIGH-END phones, then yes, WP is at about the same level as BlackBerry 10, if not worse. But on a global scale, that’s a minority market.

      P.S. I’m a fandroid (who only uses AOSP custom ROMs) but I’m always willing to acknowledge that Android is not perfect. WP does some things right, so does BB10, and Android can learn from them.

    • Blueliner

      I am fully aware of everything you just said and I agree with you. However, you guys are just dissecting what I’m saying in the wrong manner.. I’m just critiquing OP’s last sentence as far fetched. That’s all.

    • Tom

      I suppose “dozens” is exaggerating, but I wouldn’t be surprised if the number is at least 12 :P Most likely South America and the less affluent parts of Asia will have snapped up WP faster than iOS. In Brazil especially, where import taxes made the Nexus 4 cost over $800 USD at launch (just think of what that means for iPhone prices there).

    • Tom

      It may be overtaking iOS in total sales… but in which markets? iOS probably stomps on WP in the $500+ market. On the other hand, iOS doesn’t even have a presence in the markets where WP has gained the most ground. The only competition in such markets is from Android – which is awesome on Nexus 4 level specs, but god-awful on 1.0 Ghz CPU + 512 MB RAM (especially with OEM skin bloat).

  • wes

    Seriously get rid of RT. Merge it with Windows Phone Os, and bring great BayTrail tablets/hybrids.

    • Marc Palumbo

      I don’t want RT to go away. I have a desktop machine with windows 8 pro and all other devices are RT. This is a great scenario. They need to merge RT with WP. This is what Threshold will try to do

    • wes

      I think they can give RT a great experience even if they were to merge it with WP. It’s like Android for Nexus tablets and Nexus phones, or iOS for iPads and iPhones.

      Keep the start screen for tablets and windows phones and get rid of desktop mode. That will differentiate the difference between RT/mobile and Pro/desktop/real pc work.

      I have a surface pro and I love it. I use it as a tablet, laptop, and desktop. The RT was just too restrictive vs the Pro.

  • vn33

    So Microsoft, you finally figured out that Licensing fee will not line your bottom line as much as having a popular ecosystem ?

  • D Kup

    Having to play one of Nokia’s Windows phone in the mall, I think Windows Phone is quite good. The problem is not the OS… It is Microsoft. Somehow, Microsoft managed to lost support from other manufacturers and they managed to have Windows RT and Windows 8.1 that confused everyone.

    Nokia is a fine hardware company and Windows OS is quite good on the phone. Now, get rid of Microsoft and have someone else to manage this whole smartphone business and Windows Phone will have a chance.

    Since Windows 95/XP, Microsoft lost its days….

  • Miser Phillips

    Windows Phone is a great OS , giving free to OEM’s instead of charging them a fee helps with more WP devices being produced. The fact than Android and iOS have stopped using Skeuomorphism design language and instead is now using Flat UI design language like Windows Phone shows just how good the OS is.

  • AlphaEdge

    An act of desperation, after fire sale prices having very little effect. This will be a case of too little too late. Android will continue to dominate hardware introductions, and thus the overall market.

  • Rhett H

    I think WP has a place in the market, I’d love to see them take away from the “chain-walleted genius bar!”

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