Should New Lumia Devices be sold at a loss ?

[slivy58]

We can only dream...

Highly doubt MS will discount below what the market is dictating for a similar spec'd device, I'm going to say here in Canada the 950 will be priced $800+ while the 950XL will be around 900-950+, have a sneaky suspicion though we might not even see the 950XL in the great white north if history continues to repeat itself. Considering the overpriced L830 is still holding strong at $500 here I can't see them only tacking on another $100-$150 for something immensely superior spec wise, my only hope is next week will be revealing enough in that we'll have a better idea where WP/W10M will be heading in the short term.

"Darling, you gotta let me know Should I stay or should I go?"

 

[tgp]

Highly doubt MS will discount below what the market is dictating for a similar spec'd device,

With similar specs and similar prices, the difference is down to the OS. As it stands currently, Microsoft is at a disadvantage here. WP/W10M is a little known operating system with a less mature ecosystem.

All else being equal, what would make an OS agnostic customer choose a Windows Phone over an iPhone or Android? That is the question that Microsoft needs to answer. Even among the smartphone leaders, there is not much "jumping" by customers. There needs to be something compelling for us to switch.

 

[Tien-Lin Chang]

Well, first we need a defination of "loss" cos selling profit obviously include following RD works at update, repairing and so on. So if W10M keeps the slow paces and long maintainance period like what they've done in WP8 then I'd say they gonna lose money anyway. Just look how many people still hold their Lumia 920/1020 and wait for the real "flagship" yet still receiving latest update, there's no way the profit from each phone can support three+ years RD without over-price your product. Just take a look at iPhone price-tag but they are running a close ecosystem and they do use some prime and unique hardware and provide a full software package that can charge for some price.

In the W10M case, we all know that the software is free and the hardware price can be roughly seen from estimated BOM. There's no way the new phone can avoid a head-on price war with android no matter MSFT want it or not. If they keep their WP8 price strategy I'm afraid we'll see the blackberry story again.

I think the price should be stick on those similar-SPEC android big brands and get maybe 50$ cheaper then stick on two-year or 18 month maintainance to save the invisible spend while keep updating product line to natually wash-out old products (not updating less improve, less attractive products like they done in WP8 era). This can keep a healthy cash flow from loyal costumers and drag someone to try it (like it or not they paid for it anyway). With this competitive price MSFT can also sell plan-free phones instead of being dropped by carriers and I believe this helps the sell globally.

 

[Jazmac]

Selling at a loss benefits no one.
Not the consumer, not shareholders nor Microsoft. I've said it before, the people who make or break network based devices are those with the keys and the patents for entry to that space. That includes people like Facebook, google, Snapchat, Instagram and a few others with dumb stuff kids that spend all day doing. In short, if those businesses continue to make it impossible for Microsoft to exist in that space, it simply will not exist in that space. Period.

Microsoft has to do what Netflix has done and that is to flip the script. Netflix innovated around companies like Blockbuster and its brick and mortar stores because it saw that people could wait a day to get a video in the mail and its model eliminated those dang late fees.

Its now doing to Cox, Comcast, Directv and Dish what it did to Blockbuster and people are cutting cords by the thousands. Granted, Netflix isn't doing it alone but they have helped spawn tons of other internet based streaming services, including Amazon Prime.

I trust Microsoft is up to something huge with Windows 10 and whatever it is will require all parts of that company to pull its own weight. From Azure to operating systems to Office to Phones and everything in between and it has the infrastructure to do it.. I don't see that happening by selling at a loss.

 

[Guytronic]

Been thinking about initial retail.

Perhaps a price in the premium range would drive interest.
If interested consumers on the edge were sparked by a proposed cost comparable to other premium devices maybe people looking for different would turn their heads.

To some it's all about the OS.
To others it's all about the hardware.

Hard to say what may drive number three to the top.
I honestly believe "established" doesn't mean eternal.

 

[Keith Wallace]

The problem is that failed for BlackBerry. Adding the Android runtime destroyed native BlackBerry app development and failed to improve market share. Now BlackBerry is releasing an Android device.

If that succeeds, then BlackBerry 10 is dead. If that fails, then BlackBerry will most likely exit the handset market completely.

Firstly, you say that like Blackberry made a mistake with the Android emulation. They weren't exactly backing down from a position of strength. It was a gamble necessitated by a dead ecosystem. Their alternative was to sit and play in the dirt, because for as bad as we say WP app support is, BB10 was even worse.

Secondly, the two instances aren't quite the same. W10M seems to be taking more liberties to get foreign app code to integrate thoroughly with W10M services, while integrating some level of W10M design as well. I never had a BB10 device (or knew someone with one), but it sounded like the OS did things in a very clunky, desperate manner. Astoria similarly sounds desperate, but it also sounds like it's been developed more intelligently, and more thoroughly. It won't have to deal with things like varied methods of input, it just needs to align some slight visual differences.

Thirdly, BB10 was screwed from the get-go. Not many cared about the thing, or even knew it existed. The advent of W10 Universal apps will get W10M offerings (and re-compiled stuff from Android and iOS) more attention because of hybrids and tablets and Xbox One and phones, which should be more prevalent than BB10 ever was, even if they're an overall failure. BB10 would never have hoped for the kind of user base W10M will potentially tap into, simply because 100 million people are allegedly on the PC platform already. That's free marketing in a way, the fact that W10M is on a computer will clue people in to what Lumias are in a very natural, simple way.

 

[Tien-Lin Chang]

Selling at a loss benefits no one.
Not the consumer, not shareholders nor Microsoft. I've said it before, the people who make or break network based devices are those with the keys and the patents for entry to that space. That includes people like Facebook, google, Snapchat, Instagram and a few others with dumb stuff kids that spend all day doing. In short, if those businesses continue to make it impossible for Microsoft to exist in that space, it simply will not exist in that space. Period.

Microsoft has to do what Netflix has done and that is to flip the script. Netflix innovated around companies like Blockbuster and its brick and mortar stores because it saw that people could wait a day to get a video in the mail and its model eliminated those dang late fees.

Its now doing to Cox, Comcast, Directv and Dish what it did to Blockbuster and people are cutting cords by the thousands. Granted, Netflix isn't doing it alone but they have helped spawn tons of other internet based streaming services, including Amazon Prime.

I trust Microsoft is up to something huge with Windows 10 and whatever it is will require all parts of that company to pull its own weight. From Azure to operating systems to Office to Phones and everything in between and it has the infrastructure to do it.. I don't see that happening by selling at a loss.

It's funny how much trust you have to MS as if they have a whole new business model can shake the market with W10M punch.

I didn't see MS being able to create new business mode in the past 25 years. The three big things they have successed beside computer OS is all based on similar strategy :
1)IE : give away free software (lost money) and make it defult inside the OS to sink enermy
2)office : keep a blind eye to crack users (lost money) and special file format to expend user base and isolated from other products
3)Xbox : they simply lost money (huge ads and make very little to non profit from the device selling) to tear the market dominated by japanese brands

I don't see convincing hint, press or market movement supporting the fact that they will do it differently this time.

 

[Jazmac]

It's funny how much trust you have to MS as if they have a whole new business model can shake the market with W10M punch.

I didn't see MS being able to create new business mode in the past 25 years. The three big things they have successed beside computer OS is all based on similar strategy :
1)IE : give away free software (lost money) and make it defult inside the OS to sink enermy
2)office : keep a blind eye to crack users (lost money) and special file format to expend user base and isolated from other products
3)Xbox : they simply lost money (huge ads and make very little to non profit from the device selling) to tear the market dominated by japanese brands

I don't see convincing hint, press or market movement supporting the fact that they will do it differently this time.

And even if you don't know to use it, they make a great spell check too.

 

[Krystianpants]

We can only dream...

Highly doubt MS will discount below what the market is dictating for a similar spec'd device, I'm going to say here in Canada the 950 will be priced $800+ while the 950XL will be around 900-950+, have a sneaky suspicion though we might not even see the 950XL in the great white north if history continues to repeat itself. Considering the overpriced L830 is still holding strong at $500 here I can't see them only tacking on another $100-$150 for something immensely superior spec wise, my only hope is next week will be revealing enough in that we'll have a better idea where WP/W10M will be heading in the short term.

"Darling, you gotta let me know Should I stay or should I go?"

I agree that Canada always gets screwed over. With our shrinking dollar even if the price is say 600 in the US it will convert to $795 here. Plus our HST taxes at 13% it will end up being $900. So that's pretty insane. And btw I got my lumia 830 a while back for 399$ from Fido. It's locked but unlock codes are cheap.

 

[a5cent]

The problem is that failed for BlackBerry. Adding the Android runtime destroyed native BlackBerry app development and failed to improve market share. Now BlackBerry is releasing an Android device.

If that succeeds, then BlackBerry 10 is dead. If that fails, then BlackBerry will most likely exit the handset market completely.

The approaches only look similar on the surface. I don't think BB's fate is in any way a useful indicator of where W10M is most likely headed. There are just far too many differences.

When BB introduced Android compatibility, they eliminated any reason companies had to develop native BB phone apps. The unrestricted availability of Astoria and Islandwood will do the same for MS, as their existence leaves no economically sane reason to continue investing directly into the Windows smartphone app ecosystem. I'm referring specifically to those types of apps that are targeted directly at phones and have no ambitions to run on anything else, which currently comprises the overwhelming majority of all the apps in the WP app store.

In contrast to BB however, MS will retain an ecosystem which it hopes developers will deem worthy of investments, which is obviously the UWP. I suspect the first developers to care about this will most likely be corporations with their LOB applications, looking to reduce software development costs for their mobile workforce. If consumers get anything out of this likely depends on how much demand consumers create for such apps in MS' unified W10 app store. IMHO MS is betting everything on that working out. If it does, it's likely that many of those apps will eventually include phone UI's too. Even apps that don't include a phone UI may still reasonably be installed on WM devices however, at least if you occasionally dock your phone and use continuum.

If Islandwood works well, we could potentially also whiteness a dynamic working in the opposite direction, where increased demand in the W10 store would motivate developers to extend their apps (which started life on iOS) to UWP, so they can sell them to people using Windows tablets and PCs. This is one of the most interesting capabilities MS is gaining by compiling UWP compatible apps from iOS source code.

There are a dozen other things that also play into this, but that should already make it clear that this situation isn't directly comparable to BB's. With the adoption of Android, BB sacrificed their entire ecosystem. With the adoption of Astoria and Islandwood, MS is sacrificing investment into Windows phone apps, but hoping investment into the UWP will eventually make up for it, which Islandwood could ironically play a role in facilitating.

 

[HoosierDaddy]

Should New Lumia Devices be sold at a a loss?

YES, but only the days I buy one.

This thread reminds me of the classic bit by Albert Einstein (stage name: Albert Brooks):

 

[Richpl]

Selling at a loss will push the manufacturers to use cheaper materials which leads to poor products. In most cases.

 

[nohra]

I agree that it's necessary to price these very aggressively low, not only to pull people away from other phones, but also to convince existing WP users to upgrade rather than continue waiting. With the loss of the old 2 year contract system of getting phones, I'm a lot less likely to get a new phone as often as I used to be. If it's priced close to the 830 I may be tempted, but anything higher and I'll just continue to wait.

 

[slivy58]

I agree that Canada always gets screwed over. With our shrinking dollar even if the price is say 600 in the US it will convert to $795 here. Plus our HST taxes at 13% it will end up being $900. So that's pretty insane. And btw I got my lumia 830 a while back for 399$ from Fido. It's locked but unlock codes are cheap.

Isn't "screwed" our middle name LOL. I purchased my L830 the first day it was available in western Canada, couldn't find any prices lower or at least didn't see any, suppose would have been better to wait a month or two and probably something to consider with the "soon to be" new arrival(s) in hopes of a price cut (yeah ok), always a smart move but not necessarily an easy thing to refrain from doing or at least not in my case anyways haahaha.

 

[tgp]

I agree that it's necessary to price these very aggressively low, not only to pull people away from other phones, but also to convince existing WP users to upgrade rather than continue waiting.

You have a good point here. The lower the price, the higher the sales. That is Sales 101.

There is also a downside to low prices, and that is perception of quality. We as consumers tend to base quality on how much a product costs. If the iPhone 6S+ cost $350, it would not be perceived as high quality. Customer satisfaction would undoubtedly be lower. Sure, more would sell, but at lower profit and lower customer satisfaction.

 

[Krystianpants]

The approaches only look similar on the surface. I don't think BB's fate is in any way a useful indicator of where W10M is most likely headed. There are just far too many differences.

When BB introduced Android compatibility, they eliminated any reason companies had to develop native BB phone apps. The unrestricted availability of Astoria and Islandwood will do the same for MS, as their existence leaves no economically sane reason to continue investing directly into the Windows smartphone app ecosystem. I'm referring specifically to those types of apps that are targeted directly at phones and have no ambitions to run on anything else, which currently comprises the overwhelming majority of all the apps in the WP app store.

In contrast to BB however, MS will retain an ecosystem which it hopes developers will deem worthy of investments, which is obviously the UWP. I suspect the first developers to care about this will most likely be corporations with their LOB applications, looking to reduce software development costs for their mobile workforce. If consumers get anything out of this likely depends on how much demand consumers create for such apps in MS' unified W10 app store. IMHO MS is betting everything on that working out. If it does, it's likely that many of those apps will eventually include phone UI's too. Even apps that don't include a phone UI may still reasonably be installed on WM devices however, at least if you occasionally dock your phone and use continuum.

If Islandwood works well, we could potentially also whiteness a dynamic working in the opposite direction, where increased demand in the W10 store would motivate developers to extend their apps (which started life on iOS) to UWP, so they can sell them to people using Windows tablets and PCs. This is one of the most interesting capabilities MS is gaining by compiling UWP compatible apps from iOS source code.

There are a dozen other things that also play into this, but that should already make it clear that this situation isn't directly comparable to BB's. With the adoption of Android, BB sacrificed their entire ecosystem. With the adoption of Astoria and Islandwood, MS is sacrificing investment into Windows phone apps, but hoping investment into the UWP will eventually make up for it, which Islandwood could ironically play a role in facilitating.

Not to mention blackberry had a separate store for android apps. The phone OS was also not really worth keeping as there was nothing interesting about it and no great features. They didn't create any developer tools to make things easy for people to actually create blackberry apps based off their android code. Visual studio is being created with cross platform development in mind. A developer doesn't have to use xcode or a java xde and visual studio to create apps for all 3 platforms. Everything can be done in Visual studio. You can also do this in a single language like C# but still have hooks for something like ios metal which will only target the ios app. It's really their developer tools that stand out in all of this.

 

[Spectrum90]

Microsoft phone division is losing $500 million per quarter. They're already selling at a loss.

 

[Rose640]

Microsoft phone division is losing $500 million per quarter. They're already selling at a loss.

2 billions per year? Where did you get that info, kinda sounds unbelievable, you can verify that?

 

[tgp]

Microsoft phone division is losing $500 million per quarter. They're already selling at a loss.

That comes out to about $50 loss per device. An interesting point about this number is that it is thought that Microsoft earns about $2 billion/year from Android royalties, the same amount as WP losses.

This is of course assuming that your number here is accurate.

 

[Spectrum90]

2 billions per year? Where did you get that info, kinda sounds unbelievable, you can verify that?

http://blogs.barrons.com/techtrader...le-profits-650m-users-by-2018-says-canaccord/

It can be deduced from the financial reports. For the last quarter I got losses over $600 million. It was getting worse.