Microsoft Windows Phone 7 Costs Could Skyrocket

Microsoft's Windows Phone 7's marketing push could total $400 million, on top of development costs for the smartphone platform, says an analyst.

Windows Phone 7 will cost Microsoft nearly a half-billion dollars in marketing during the smartphone operating system's initial rollout, says one analyst.

"This is make-or-break for them. They need to do whatever it takes to stay in the game," Jonathan Goldberg, an analyst with Deutsche Bank, told TechCrunch Aug. 26. "They don't have to take share from Android or Apple, so long as they can attract enough consumers switching from feature phones."

Goldberg estimated Microsoft's marketing tab for Windows Phone 7 at $400 million, once the devices launch later in 2010. That adds to the company's already substantial development costs for the platform. Goldberg also suggested that HTC, Samsung and LG Electronics remain the primary Windows Phone 7 handset manufacturers.

Given the need for any smartphone platform to present users with a broad ecosystem of applications, Microsoft has been pushing developers to build for Windows Phone 7. Earlier in August, the company rolled out a new series of online tutorials demonstrating the best practices for game- and app-building.

"We recognize that providing as much technical content as we can for the full range of developers is what developers deserve," Brian Watson, Microsoft's director of developer experience for Windows Phone 7, wrote in an Aug. 17 posting on The Windows Blog. "While we plan on having more live training sessions in the coming weeks and months, we are also committed to making that content available as quickly as possible to as many developers as possible."

The 12, 50-minute sessions include "Advanced Application Development" and "Marketing Your Windows Phone 7 Application," and cover fundamentals such as how to build Silverlight- and XMA-based applications.

Microsoft has reportedly been offering to pay developers of popular iPhone applications to port their programs onto Windows Phone 7. Business-centric developers are also an apparent focus of Microsoft's platform push. The final Windows Phone 7 developer tools will be released Sept. 16.

In October 2009, Microsoft released Windows Mobile 6.5, intended as a "placeholder" for the company's smartphone market share until the release of Windows Phone 7. Nonetheless, Microsoft's share has continued to decline, buffeted by strong competition from Google Android and the Apple iPhone. Microsoft's other recent consumer initiative, the Kin social-networking phones aimed at teenagers and young adults, was unceremoniously shut down earlier this year in the wake of poor sales.

Windows Phone 7 approaches the smartphone in a different way from those competitors. Instead of featuring gridlike pages of individual apps, Microsoft's user interface consolidates Web content and applications into subject-specific content "Hubs" such as "Office" and "Games."

Microsoft plans on launching Windows Phone Marketplace, its online apps bazaar, in early October. That suggests manufacturers will begin to roll out Windows Phone 7 devices well ahead of the holiday season.

That October launch for Windows Phone Marketplace, followed by a Windows Phone 7 release within the same narrow timeframe, would be in keeping with earlier rumors. In June, tech blog Engadget quoted Mich Mathews, senior vice president for Microsoft's Central Marketing Group, as saying the Windows Phone 7 launch will happen in October.