Should New Lumia Devices be sold at a loss ?

Aquila

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I think that we're seeing two different arguments that can be reconciled.

The first is that, "heck no they shouldn't underprice it, it is clearly WORTH a full flagship price because it is a full flagship phone with flagship specs and I love it". The second is, "but everyone who doesn't want it already (everyone who hasn't read this thread yet) isn't going to want it if there isn't a value argument to be made.

So reconciliation: What price would make someone who went in the store to buy "the best phone", take a look at Windows long enough to examine the spec sheet or ask a question that may lead to them buying the 950 or 950XL? Nexus 6P, Note 5, iPhone 6sPlus and Lumia 950 XL are on a shelf together, lights, music, nothing else in the area... $600, $900, $1100 and ... $ ___?

If I am average joe schmoe who doesn't even know that Windows makes phones, what's the number that makes me go, "wait, what's this?"
 

7a2eer

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tl;dr

<rant>
I've been going through the API and designing software using the MVVM pattern for the Universal Windows Platform.
Unfortunately I feel as though W10M is DOA with Islandwood and Astoria.

I have already sold my Lumia 1520, and have decided to stick to my Nokia 808. I dislike Android and iOS, BB10 was DOA, and now the WP8 I loved is no more. Whatever passion I have with modern app development dies with WP8.1.

I wonder how everyone else feels about the changes to the OS. Personally I feel as though W10M is a clunkier Android, even the live tiles have little purpose these days.

Why not do the opposite? (AOSP, WinRT application layer). They are not going to dominate the mobile ecosystem, at least give consumers the best mobile experience. Tax OEMs with their apps/services *patents cough cough*
</rant>

Its not like you guys are going to miss an irrational and confused developer like myself. Hopefully you will get to try my Android games soon, you can download them from the Windows store :cry:
EDIT: Never making an app with hamburgers, but Windows exclusive development is now moot imo.

As to price, no need to discount. Either way Microsoft is going to generate similar revenue over an extended period of time, provided their platform is DOA. Save this for another rant :(((
 
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houkoholic

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Apple and Microsoft are in two different leagues in mobile. Apple of course would like to have a higher market share (meaning higher sales; what company wouldn't), but what they have is fine because they make a boatload of money. Apple makes more profit than any company in history. Microsoft so far has lost a lot of money in their mobile division.

Microsoft needs higher sales. Apple doesn't. If Microsoft made a profit at 2.7% market share, they wouldn't care either.

You've just contradicted yourself. When you said if you have higher profits then market share is not as relevant, then you go around and said Microsoft needs higher market share, but completely ignores that Microsoft is changing their strategy to stop chasing for higher market share and going for higher profits, that's the entire point of the strategy re-alignment.

Everyone should understand that a 2.7% marketshare of 5 different types of 50 dollar phones with practically no profit margin is much less desirable than a 2.7% marketshare of just 1 type of 400 dollar phones. Nokia's strategy led to the former outcome, which was not a particularly desirable position, MS is now trying to going for the later. That's why they say they aren't chasing market share. It's surprising that you can say you understand that profit is better than market share, then go and say MS need market share, when MS is clearly saying they are going for profits. It makes no sense.
 

zkyevolved

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It's unrealistic for people to say these phones should be under $500.

Spec wise, 950/950xl are on par with any flagships out there. Plus continuum, Windows Hello, SD card slot, exchangeable battery, dual SIM, and the expected superior camera they are truly strong competitors.

Strategy wise, MS won't want these two phones comparable with Nexus. Nexus has always been the representative of the best budget phone, while 950/950xl aim at premium business and WP fans markets. They will be charged similar to Galaxy S6 and iphone, but a little bit lower to compete.

My guess is $579 for 950, and $659 for 950xl.

Samsung and Apple are GOLIATHS! Microsoft is a tiny little guppy in the smartphone industry right now. You can ask 100 people and I'm sure 99% of them won't know Microsoft is making phones now. You're saying this just because they're Microsoft. Let's make a new company called LittleFoot. Let's launch a GREAT phone that will have a tiny ecosystem at launch, great specs and a cool camera for 700 bucks! Let's see how many sell :p It'll fail and flop right on its face.

My current phone, an LG G4, is selling for 430 euros. Top specs, ranked as one of the best camera phones, having a super display, nice build quality etc. If they can sell for 430 and have flagship specs and be a large company, then Microsoft, a larger company, can also sell for 430 or 500 and make a damn good profit. If they want market share they need to START like Samsung, with CHEAP devices that have GREAT specs. Now Samsung is resting on its laurels and charging 800 bucks for a device... what in the world... That's why I'll never buy another Samsung device again. Even an iPhone 6S plus is like 740 for 64 gb! haha. Apple, cheaper than a Samsung device? Never thought that day would come, but oh well. I'll never buy a Samsung device for that price! only because it's a HUGE chunk of money! Same thing for Microsoft. It's a phone! A PHONE....
 

Tien-Lin Chang

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It's a phone! A PHONE....
Nope, they will keep telling you that with continuum "It's a PC! A PC!"

Yeah right, a PC can't run .exe means no more than a 40~130USD android smartTV stick to me.....

Then they will scream "it continue your WORK! YOUR WORK!"

Yeah right, with dropbox I can continue my work over all my devices. Can't see what's a big deal over this....
 

StevoPhilo

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The problem isn't the price. The problem is your average Joe walking into a BBY or ATT store and asking the associates for info on the WP itself. Do you think ANY of them know what WP has to offer? Heck they probably aren't aware they carried WP. I work at BBY selling computers and I have a tough time recommending them (even though I know what it does have to offer). Yes the people in the cell phone department don't even know what WP is or how it's any different. The price will get them to look, but as soon as they look at the app store or ask for help they will get redirected to a Samsung or an iPhone.
 

hemanlive

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No company will make a loss or want to loose on profitability. Where they make that profit is a different matter altogether. Google gives away Android OS and all its suite of Apps for free. It instead makes money from search and from within those apps. It is a great business strategy that is highly successful as of now.
Apple makes more than 50% in profit from the sales of iPhones. This includes the cost of development, R&D and Marketing etc. It also makes money from other suite of services and apps, but the phone business alone (as do other devices like the iPad, Macbook etc.) makes a pretty decent profit. Another example of a successful business model, even though it is completely different from Google.
Microsoft, in my opinion, is a confused company. The CEO says proudly "Mobile first, Cloud First". Then he writes off the mobile business almost entirely citing it is not making enough profits. Apparently they expected more sales and a bigger market share. They need this, not to make money via phone hardware sales, but to drive revenue from the overall ecosystem (like Google). So they too start giving the OS free to other OEMs. They say they will make their own phones for now. But unlike Google, whose flagship phone costs 50% of OEM flagships, they price their devices the most. One argument is that OEMs have the room to compete with low price phones. But I don't buy this argument at all. OEM will only be interested if they see a market in it for them. For that MS, needs to sell phones at ridiculously low prices. For. e.g. the 950 and 950XL should ideally be cheaper than Nexus 6 and Nexus 6P. Further, the 550 should be just about $100 with the XL of it could be priced about 25 - 30 dollars more.
Once it does that kind of pricing, it will entice users purely on the basis of price. Fans like me, truly believe in the windows ecosystem, particularly windows phones. I am sure that most users who get lured because of price, will be pleasantly surprised with the OS too. Now you have managed to 'delight' your customers. Gradually the market size will begin to swell. This will lure OEMs. OEMs will know of ways to build better quality phones at even lesser price points. Trust them on that. There are ample examples of how asian companies are making profits despite selling top of the line flagship phones for almost entry level prices. OR At that point MS may start increasing the prices gradually or move out of entry level completely to accommodate the OEMs. However, that point has not come as of now.
Regardless of how sad it makes me, I am not very optimistic about future of windows phones. Provided of course MS finds a hardware partner (which again is tough given what has happened to Nokia) that truly believes in the windows phone OS and makes truly remarkable phones (think latest Galaxy or Experia or HTC phones running windows OS). Since that is unlikely, MS needs to support itself. But this does not seem to be happening.
 

chmun77

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NO!

Since not much people will be getting Windows Phone, it will be only worse if MS is selling them at a loss if someone decided to get it. Just selling them with profits. Why incur further losses when it is not already earning?
 

MwenyeKitty

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I agree with you. Windows Mobile has little going for it in terms of numbers (users and app developers), so it does make sense to make cents instead of dollars. Or really sell at a loss. They already wrote off $7,600,000,000 in the Nokia deal.

CHECK THIS OUT: If they'd left Nokia be, convinced them to make Lumia 930s only and sell them for only $100 and they (Microsoft) would cover the difference, assuming the current price at ~$400, that would mean over 25 million 930s floating around at the price of a Lumia 535. Or if they chose a lower Lumia, like the 730/735 at $350, that would mean over 30 million sold at $100. But that's a bed of might-have-beens.

I think they ought not try and make money first; they should make ground first. Then money later.
 

spazinvader

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Already so many comments ;-) so only checked the first page and didn't bother with the rest :p I am just giving my opinion.

My opinion is a big No for selling devices at a loss. The customers they get(bought) through this is not going to just stick with the platform if they start selling future devices at a profit. But some one suggested, they should make profit but a margin which is just a little higher than a razor thin margin. That will be good for Microsoft in many ways, surely will be lot lesser than an iPhone or Samsung Galaxy and a lot more affordable by me :p

MS just needs to make sure that all of it's near 3% market share stay with the ecosystem first. That too with a flagship. In the ocean of Android and iPhone, even if the Windows phone user survives normally everyday, be it at college, work place, etc, others will definitely notice the Windows user. Add to the mix that Windows phone users generally gets more battery time than others, productivity apps for free(mainly Office; but others will come gradually as the core is now same and easier for universal apps to be written), others will definitely switch in the long run. The core fans of Android or iPhone will not switch. Even if they were given the phones for free. But other casual users will switch if the phone looks different enough and productive.

Productive not in the sense of work but also music, video, games and all other things that should be present to engage the user all times of the day. So Groove music and Film & Tv will also play a part. And this got me worried a lot. But they are improving faster than before and hopefully they will be great to use by next year.
 

tgp

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NO!

Since not much people will be getting Windows Phone, it will be only worse if MS is selling them at a loss if someone decided to get it. Just selling them with profits. Why incur further losses when it is not already earning?

True. Part of the equation is recouping R&D expense. That is a fixed cost, that is the same whether you sell one phone or 1 billion phones (looking at it simplistically). The more you sell, the less the cost per device. As long as Microsoft is at least getting production cost back, anything above that is a gain.

As a5cent said in a post somewhere, Microsoft is probably not going to ever make a profit on this batch of phones. If they sell them for a high margin over production cost, the profit per device (not counting R&D) will be higher but there are less to spread out R&D cost. A lower price will reduce the profit margin (again ignoring R&D), but there will be more sales to spread out R&D cost.

The R&D cost is spent. It's already been paid. How many phones Microsoft sells now doesn't change the cost. They might as well price them to make a profit over production cost. Retailers try to figure out at what price any given product will give them the most overall profit: high margin/low volume or low margin/high volume. Microsoft might as well do that same with this new batch of W10M devices.
 

Nishant Sirohi

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Well not at loss, but slim margins perhaps.
At least in India, they need to have the devices available at multi brand stores, and considering they have been pushing low cost devices, their ads are simply useless, i mean the lumia 535 ad on tv had nothing but a spanish song playing in the background
 

HoosierDaddy

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$550 and $650 for the 950s. I'm in for an XL. Cheaper than the 1520 MSRP.

$130 for the 550! And I thought the 640 was a great deal. If T-Mobile and AT&T sell those the street price could be $75 or less.
 

MikeSo

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It's unrealistic for people to say these phones should be under $500.

Spec wise, 950/950xl are on par with any flagships out there. Plus continuum, Windows Hello, SD card slot, exchangeable battery, dual SIM, and the expected superior camera they are truly strong competitors.

Strategy wise, MS won't want these two phones comparable with Nexus. Nexus has always been the representative of the best budget phone, while 950/950xl aim at premium business and WP fans markets. They will be charged similar to Galaxy S6 and iphone, but a little bit lower to compete.

My guess is $579 for 950, and $659 for 950xl.

Hey, good guess! It ended up being $549 and $649. I personally think they needed to be at least $100 below that to compete. But it's not a crazy price at least like it would've been if they priced it like the S6 Edge Plus or iPhone 6 Plus.
 

Ten Four

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I wonder what the Continuum docking device will cost? Anyone heard that yet. I'm beginning to wonder if I have underestimated the appeal of Continuum, including for myself. That tiny dock looked pretty neat in the photo I saw. Here's the scenario I can envision now. Someone is in the market for a new PC for home use and sees that they can get a pretty sweet phone and this little dock, then also have a nice Windows 10 PC using their old monitor, keyboard, and mouse. The typical person doesn't really need a desktop PC at home anymore, but a laptop or even the Surface is also overkill. However, once in awhile they need the big computer to do taxes, write a resume, work on a spreadsheet, or even surf the web at a decent size with everything working properly. A 950 or 950XL plus Continuum might be just the trick for that person, and they get a nice phone with a great camera too for less than the cost of a decent PC.
 

xmai77

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Selling at zero profit or less means MS would remove any and all profit potential from the WP hardware market. This would make MS the scourge of the industry and draw the ire of companies who rely on smartphone profits to survive. By killing the profit potential in the WP market, MS would also turn away any OEMs currently thinking of releasing a WP device. I personally don't find engagement by other OEMs important, but many others here do.

If MS wants other OEMs to engage, they must take the exact opposite approach, by asking well above average prices.

I actually question whether MS is earning any money on these at all, even at $700. There is no set price at which a phone is guaranteed to make a profit, as it must first recoup the hundreds of millions MS invests in software and hardware engineering. That means the only way to make a profit is by selling high-end devices, with high margins, in large numbers... something high-end Lumias don't typically do.

Assuming these won't sell in large numbers, it's safe to say these devices are already losing MS money at almost any price. IMHO the question is not whether MS should be prepared to lose money, but how much?

I do think they must come in below the price of an iPhone, but expecting MS to go much lower isn't fair either.

Either way, chasing market share is not W10M's goal. Even if it was, it would be far more reasonable to do that with low end devices.

Not necessarily. The same things were said when Google decided to release the Nexus line of phones but it worked out. I'm sure it did hurt the other OEMs but many are thriving despite the presence of the Nexus phones in the market. I think Microsoft needs to do the same thing and release a flagship phone at a lower cost than other flagships in order to grab market share. I feel one-two punch that the Nexus phones and budget Android devices provided really propelled Android to it's current standing on the market.
 

KarateDad

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So, now that we know the pricing, $649 for the 950XL, what do you think? The iPhone 6s Plus is $749. The Galaxy 6S Edge+ is $815.

Probably not a loss leader for Microsoft, but definitely cheaper than the competition.
 

xboxnerd

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Hey, good guess! It ended up being $549 and $649. I personally think they needed to be at least $100 below that to compete. But it's not a crazy price at least like it would've been if they priced it like the S6 Edge Plus or iPhone 6 Plus.

Cheaper than I guessed! I am now seriously considering getting a 950 early next year.
 

melhiore

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Now we know the pricing. Good. If 950XL will be selling for ?530 ish w/o any accessories I will be getting an iPhone soon... Microsoft set the price slightly too high for the phone that does not have any ecosystem behind it...
 

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