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Windows Phones manufacturing price to be reduced by half for next year to gain on volume

Posted: , by Daniel P.


Windows Phones manufacturing price to be reduced by half for next year to gain on volume
Considering that the first teardowns show sub-$200 manufacturing price for phones like the Apple iPhone 4S, the revelation by Microsoft's Andy Lees that the initial batch of Windows Phones went up to $400 a piece was rather telling why manufacturers were reluctant to push more - the margins must have been razor-thin.

Now, he claims, Microsoft has secured the kind of long term component supply contracts that the best manufacturers enjoy, which will allow the production price to go down to $200 for Windows Phones as well. What will be the final price for the end consumer is another story. Apple is this bight shining example how you can make a smartphone for roughly $200 and sell it for roughly $600 by keeping tight grip on the supply chain and control component prices by prepaying, so the competition is apparently starting to learn. 

Andy Lees mentioned "volume, volume, volume" as Microsoft's main incentive to talk to exclusive suppliers like Qualcomm for better prices, since the WP manufacturers will be able to produce the phones cheaper and in abundance. He said that Redmond will be paid less royalty fees for using Windows Phone, since the licenses price depends on the cost to manufacture somewhat, but volume will be making up for that.

Microsoft is also planning to enter China with its mobile OS next year, probably riding on the wings of the upcoming Nokia Windows Phones, as the Finns sport an abundance of street cred there.

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posted on 20 Oct 2011, 09:36 3

1. snowgator (Posts: 3275; Member since: 19 Jan 2011)

Good for them, better for me. Like less expensive. Less expensive is always a good thing. You ain't Apple. Build your brand through excellent devices at affordable prices and profit will come. Microsoft seems to be prepping for WP8 anyways.

posted on 20 Oct 2011, 10:22 1

2. bluechrism (Posts: 99; Member since: 09 Sep 2011)

Also good, is that they ain't apple. If they are making them for $200 and selling for $600, that's an obscene markup in price. Yes the company has a right to make profit, and there is demand there, but that's one heck of a markup.

posted on 20 Oct 2011, 11:42 2

3. Schmao (Posts: 302; Member since: 05 Jul 2009)

That is one heck of a markup, but thats how Apple does things. Many customers seem to drool over iPhones and are willing to pay the price for the device. Apple takes advantage of this.

posted on 20 Oct 2011, 11:50 1

5. Penny (Posts: 1242; Member since: 04 Feb 2011)

The consumers get the iPhone for $200-$300, which is why they are willing to pay the price. Apple sells the iPhones to carriers for $650ish because they know the carriers will buy it even if they have to subsidize it down to the $200 cost. As long as the consumers keep getting it for $200, they don't think it is overpriced and the demand is there. Taking away the subsidy would be the only way to reveal to customers how overpriced the phone is.

posted on 20 Oct 2011, 11:43

4. brant (Posts: 24; Member since: 08 Aug 2011)

Yeah because Microsoft already make millions almost a billion from suing android manufactures so they figure they can cut those make windows phones a brake.

posted on 20 Oct 2011, 13:06 1

6. snowgator (Posts: 3275; Member since: 19 Jan 2011)

Almost true, except that it ain't almost a billion- 440 milion is the highest number I have heard. Which is still your point, I know. They have a steady stream of cash to help offset the development and production of WP. Also, again- they ain't Apple. They haven't sued anyone over the patents they own. They work out deals without going to court.

posted on 20 Oct 2011, 13:14

7. Leyjee (Posts: 47; Member since: 25 Feb 2011)

Microsoft has been in the mobile game alot longer than Droid and Apple, so if they have companies inflicting on their many patents they have all rights to sue. Its a tough game and they have to get a foot hold somewhere. Wp7 is the future !

posted on 20 Oct 2011, 14:06 2

8. denney (Posts: 98; Member since: 20 Oct 2011)

Microsoft has not been suing. They have been politely asking for royalties for patents and production agreements being violated by android manufacturers.

posted on 20 Oct 2011, 22:00 1

9. Ravail (Posts: 182; Member since: 14 Oct 2011)

Microsoft is most likely making more money off Android phones sold than off their own Windows Phones sold.. its hilarious if u ask me

posted on 20 Oct 2011, 22:46

10. jtech (Posts: 101; Member since: 14 Jul 2011)

^ no its not

posted on 20 Oct 2011, 22:48

11. jtech (Posts: 101; Member since: 14 Jul 2011)

no its not ^^^

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