Editorial: Why $200 million dollars might not be enough

Is $200 million dollars really enough? For the everyday man, woman and family the answer is pretty damn obvious but for massive multinational corporations trying to regain market share in an industry they forfeited their grip on years ago, we’re not so sure the reply is a simple ‘Yes’ or ‘No’.

In all of the hype surrounding new Nokia devices and the first LTE Windows Phones on the horizon, one very interesting rumor began about how much money Microsoft and Nokia (and to a lesser extent AT&T) are willing to bet on their upcoming portfolio. Initial reports pegged the budget at $100 million dollars, but later insiders claimed it would be double that amount for a staggering $200 million dollar total. That’s a ton of money to invest in an area that Microsoft only has single-digit market share numbers in.

So that returns me to my opening question: is $200 million dollars really enough? In my opinion, no, and there’s a good reason why.

Why am I so skeptical about Microsoft’s new found cash flow for Windows Phone? It reeks of a “Plan B”.

We’ve all been complaining that Microsoft needs to give Windows Phone their all, and at first I believed this move to bet on it deeply was the right decision. So why am I so skeptical about Microsoft’s new found cash flow for Windows Phone? It reeks of a “Plan B”. There’s one misstep in Windows Phone’s first year that I can confidently blame for its inching growth in the United States: the lack of full support from all four major carriers. I can’t help but feel that Sprint and Verizon’s general lack of interest for the platform in favor of Android (and more recently the Sprint and Verizon iPhones) is coming back to haunt Microsoft.

To be honest, Microsoft should never have even launched Windows Phone 7 until it was ready for all four carriers yet instead they picked the second- and fourth-biggest while promising the first- and third-biggest some lovin’ a little later. Clearly Verizon didn’t take that too well, opting to release the HTC Trophy with only six months before Mango-powered devices hit store shelves and publicly railing on Windows Phone for its lack of LTE support. If Microsoft did choose to delay Windows Phone 7 into 2011 and get all four of the carriers on board for launch, the circumstances today might have been very different (and in their favor).

Some of you may disagree that Microsoft really needs Sprint or Verizon to be successful in America, but just look at the raw numbers:

  • AT&T + T-Mobile combined customer base: 134.34 million
  • Sprint + Verizon combined customer base: 161.1 million

If Microsoft’s plan is to spend $200M marketing phones that are either old or expensive thanks to LTE to less than half of America’s customers, I can’t see that strategy ever succeeding.

That’s 161 million people in the United States who simply don’t have the option to buy a second-generation Windows Phone from their preferred carrier (in this case Sprint + Verizon). So if Microsoft’s plan is to spend $200 million dollars marketing phones that are either a few months old or more expensive thanks to LTE to less than half of America’s customers, I can’t see that strategy ever succeeding.

Microsoft has dealt itself a tough hand and is hoping Nokia’s Ace is going to be enough to bluff their way out. But once again we see the scenario repeating itself, with rumors suggesting most of the Windows Phone announcements at CES will be found on AT&T while the other carriers’ portfolios will remain light on the Metro. It makes us wonder why Microsoft even bothered with Mango’s Fall launch, especially when the influential tech crowd will have already grown tired of the likes of the Lumia 800, Titan and Focus S by the time they’ve actually received their dues in the mainstream spotlight.

We’re desperately hoping Microsoft has something that will get their platform on all four carriers sooner rather than later. But to be blunt, throwing money at only half the people you’re supposed to be paying off isn’t going to help.


Author Description

Saad Hashmi

Founder of Windows Phone Daily. Currently pursuing a Bachelor's degree in Marketing and Information Systems. While procrastinating on that goal I write, play games a little too often, and watch exorbitant amounts of mediocre half-hour comedies because I lack the patience to watch hour-long dramas that are probably better. Follow me on Twitter: @Saad073