Home > Personal Technology > Microsoft > Microsoft to pay over $2 billion to Samsung, Sony and Huawei to make Windows Phone handsets (updated)

Microsoft to pay over $2 billion to Samsung, Sony and Huawei to make Windows Phone handsets (updated)

In a bid to gain more market share, Microsoft will now be paying a consortium of handset manufacturers to launch Windows Phone devices.

Microsoft Cash

Update: Microsoft’s communications lead Frank X. Shaw confirmed via Twitter that Microsoft does co-marketing with handset manufacturers, but that the numbers that were revealed by Eldar Murtazin were greatly exaggerated.

As rumors go, this one is incredulous: Mobile-Reviews Eldar Murtazin tweeted yesterday that Microsoft will pay Samsung, Sony and Huawei to launch one Windows Phone handset in 2014.

For Microsoft, these handsets come at a hefty price. Samsung is set to receive $1.2 billion, Sony $500 million and Huawei $600 million. The money is for designing and launching one Windows Phone handset this year. This cash influx would be a huge incentive for manufacturers like Sony and Huawei to launch Windows Phone handsets.

This sort of strategy isn’t entirely unheard of in the OEM world. In 2011, Intel created a $300 million Ultrabook fund to give OEMs some financial assistance the development of notebooks to the Ultabook standard.

Microsoft has used a similar tactic with Nokia, wherein it paid the Finnish manufacturer $1 billion a year for launching handsets on Windows Phone. Microsoft must’ve felt that that money was put to good use, as Nokia became the outright leader in the Windows Phone segment, with a market share of over 90 percent as of December 2013. One reason for this could be the fact that Nokia was the only manufacturer constantly churning out Windows Phone handsets.

Now that Microsoft has acquired Nokia’s handset division, it will have more control on hardware production. However, it looks like Microsoft also wants other manufacturers to continue making handsets for the platform. One manufacturer noticeably absent from the list is HTC. HTC has seen some success with the 8X and 8S Windows Phone handsets, but its financial troubles and uncertain future might have led Microsoft to give it a pass.

In addition, Microsoft is giving $300 million to lesser-known handset manufacturers, and could have done so to Indian manufacturers like Micromax and Xolo, both of whom launched their first Windows-based tablets last week. The arrival of new manufacturers in the market would only be benefit consumers, as prices of handsets would go down. For instance, the Nokia Lumia 625 price was initially set at $350, which was too high for a device in its category. All Windows Phone handsets for that matter, are priced higher when seen against similar devices on Android. The addition of new manufacturers would serve to create a more balanced pricing structure.

It has already been leaked that Sony and Samsung are considering launching Windows Phone handsets in 2014. While Sony is said to be in talks with Microsoft, Samsung is said to be readying the launch of the SM-W750V, a 5-inch device with a full-HD screen and LTE connectivity. The device is said to be officially announced at the Mobile World Congress next month.

Microsoft’s intentions are clear. It wants to get the global market share of Windows Phone to 10 percent. And to achieve that, it is going to need all the assistance it can get. And $2 billion isn’t a significant amount for Microsoft. It makes more through licensing fees from Android. The validity of this rumor is still questionable, but what we do know is that Microsoft needs to get more Windows Phone devices out in the market.

Source: Twitter 


Harish Jonnalagadda
Harish Jonnalagadda is an avid reader of science-fiction novels. A long-time Arsenal fan, his other interests include gaming, basketball and making music. He also likes tinkering with hardware in his free time.

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