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Microsoft aims to halve production costs with Windows Phone, only works with Qualcomm

Bloomberg just ran an interesting story interviewing President of the Windows Phone division Andy Lees, who's been making the press round lately.

The gist of the interview focuses on how it used to cost $400 to produce a Windows Phone back in 2010, but for this next generation of devices, production costs for OEMs are down to about $220. The goal though is to lower that even further to below $200, which will allow Microsoft to essentially flood the market with devices ranging from low-end (where Android dominates) to high-end (where the iPhone and other Android phones take the lead).

Something we haven't heard about though is that there is a tiered licensing based on cost of production for the OEM. The cheaper it is for them to make a phone, the less they have to pay Microsoft. So even though Redmond would be making less per device, the aim is have more devices to make up the difference.

The other real interesting tidbit is the acknowledgment that Qualcomm is the only semiconductor partner Microsoft is working with for Windows Phone:

Microsoft works exclusively with Qualcomm to develop chips that power handsets using its system, allowing it to specify technical details to ensure devices run more smoothly, the executive said.

There is currently no plan to work with other semiconductor makers for Windows Phone 7 devices, he said.

That contradicts earlier information about Nokia working with ST-Ericsson for dual-core CPUs. Indeed, even Qualcomm is on board with Nokia these days. While this doesn't rule out other semiconductors such as Samsung's own Hummingbird, it looks like Qualcomm has a favorable position with Windows Phone for the near future.

Thanks, TheWeeBear, for the heads up!



There are 7 comments. Sign in to comment

rwspark says:

Hopefully this keeps the new devices prices down (or the same) while increasing features (bigger screen, storage, processor speed, etc.)

Well...The good news is that it is Qualcomm 'ONLY' for WP7 devices; hopefully, for WP8 and beyond, other chip makers will be considered.On another note, if HTC and Samsung aren't, at a minimum, doubling their WP offerings as a result of these 'lowered production costs', this arrangement to use Q seems pointless. So far, HTC has only 2 phones announced (last year they produced a total of 5 devices), and Samsung has announced only 3 devices (big whoop, 1 more device than they produced last year). As I see it, there is no reason why HTC and Samsung can't produce as many WP devices as their Android devices.

futurix says:

Samsung only announced 2 devices: Focus Flash and Omnia W are the same device.

incendy says:

This is fine as long as Qualcomm keeps up the pace which right now they are. Just wish the Mango devices were using the latest Adreno GPU.

cool8man says:

"The cheaper it is for them to make a phone, the less they have to pay Microsoft."Then what is the incentive for an OEM to ever make a high end device?

Menzlo says:

'cause Samsung and HTC know there are people like me who only want to buy high end phones. Better to pay MS a little more and still make some money off high end users.

nizzon says:

Exactly what I was thinking.No wonder they are cheaping out on us. :