Microsoft Windows Phone 8 Can Look Forward to Carrier Support: Report

Microsoft's Windows Phone 8 smartphones face an uphill battle against the iPhone and Android devices. However, carriers are planning to support WP8 in order to have a third platform with lower subsidies, according to a new report.

In these iPhone and Android-centric days, smartphones running the Microsoft Windows Phone 8 platform will face a major challenge no matter when they arrive. Not likely to do them any favors, these smartphones are scheduled to launch when a good number of eyeballs will be focused on the newest iPhone. Still, benefitting Microsoft, says a new report from Technology Business Research, will be the support of the wireless carriers.

Microsoft will launch WP8 in the fourth quarter with support from four hardware partners: Nokia, Samsung, HTC and Huawei, according to the report. While Nokia will remain its €œchief€ partner, said the report, all four manufacturers are expected to contribute marketing and other resources.

€œOperators are looking for leverage over Apple and Android OEMs, which dominate the marketplace and saddle carriers with high device subsidies,€ wrote Technology Business Research analyst Michael Soper, who conducted the study.

Verizon Wireless, Soper noted, plans to promote WP8 much like it did Google€™s Android OS in 2009. AT&T, T-Mobile and U.S. Cellular have all €œvoiced support€ for the platform; Leap Wireless is in discussions with Microsoft about tying the smartphones to prepaid calling plans; and Sprint is keeping a careful eye on the market. If consumers respond positively to the platform, Sprint, too, will get behind it.

The high subsidy that the iPhone saddles carriers with is well known€”Apple charges carriers more for its phones than competitors do, forcing the carriers to pony up more cash to offer the phones at equivalent prices, usually $199. When Sprint, for example, first announced it would begin offering the phone, it needed $3 billion in financing help, Bloomberg reported, as Sprint faced a $15.5 billion, four-year contract to sell the iPhone. Those fees are separate, too, from the $10 billion it also had to commit to a two-year network expansion plan to help support the device.

Soper says that high-end Android smartphones have likewise become burdensome for the carriers, and they€™d like a third platform to help €œspur greater competition.€

€œIn general, Android phones are less expensive than iPhones, but the operators still feel the impact of device subsidies related to high-end phones from OEMs like Samsung and HTC,€ Soper told eWEEK.

€œTheir higher-end phones, such as the Galaxy S line, are usually their best sellers, which compounds the problem with subsidies,€ Soper added. €œFor example, the Galaxy S3 at Verizon retails for $599.99, but with a two-year contract, the price drops to $199.99. To gain favor with operators, it would be in Nokia and Microsoft€™s best interests to offer highly capable phones at low price points.€

AT&T and Nokia recently halved the price of the Nokia Lumia 900, reducing its already competitive $100 price point to $50. Or, if the phone was competitive, that was before Microsoft announced that devices running Windows Phone 7.5 won€™t be able to upgrade to the more powerful WP8.

During the second quarter, Nokia sold 4 million Lumia phones€”twice what it sold during the first quarter, but still well below the 35 million iPhones that Apple sold during its first quarter.

Nokia CEO Stephen Elop, during the phone maker€™s latest earnings call, said that Microsoft will launch a €œbold and aggressive€ marketing campaign around the launch of Windows 8, which is likely to have a halo effect for Lumia phones.

€œAs the lead mobile partner for Microsoft, we plan to deliver competitive smartphones with Windows Phone,€ Elop said during the call. €œWe intend to broaden the price point range of Lumia devices to price points both higher for better gross margins and lower for volume. Additionally, we are investing in new materials, new technologies and location-based services for a great consumer experience.€

Elop added, €œWe have learned that it takes tremendous amount of work to break through as the third ecosystem, and we are viewing the launch of Windows 8 and Windows Phone 8 as an important moment in this journey.€

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