Should New Lumia Devices be sold at a loss ?

KarateDad

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So, we all know that Microsoft is coming out with new Lumia phones soon, the 950 and 950XL. Considering everything we know about these, from a hardware perspective they are great, but not really anything above what competitors have, or will have in a couple months.

So that leaves the OS. While those of us here who know Windows Phone, have (mostly) come to love it, we are a very small percentage. And, here we are for the third time with a major re-build of the phone platform from MSFT in 5 years (WinMo 6->Windows Phone 7, Windows Phone 8-> Windows Mobile 10).

Trying to get someone to move from their beloved iPhone, or the Android they've learned to live with to Windows 10 is going to be a hard sell. I mean MSTF has struggled with this, as evidenced by their ~3% market share.

And now that the USA is largely moving away from subsidized phones (hooray), people have to think about the cost of their phones when they upgrade. It isn't just an automatic anymore.

So, I think Microsoft should sell these new phones at either 0 profit, or even at a loss. If the phones could be $100 or more cheaper than the competitors, people might seriously consider them the next time upgrade. But seriously, if joe average is at the store, deciding on an upgrade, and he can get a new Android phone a new iPhone or a new Lumia all for roughly the same price, Microsoft will lose 98% of the time.

If on the other hand, the Lumia was $100 or more cheaper, that percentage is surely to go up. If Microsoft could do this for a couple years, and actually get a foothold in market share, and then start to really show off the integration of windows 10 on your PC with windows 10 on your phone, THEN they can afford to start making a profit.

We know Apple can't afford to discount their phones, it is their bread and butter. Samsung couldn't face their share holders with that message. Google probably could get away with it with the Nexus line, but they don't need to, they are winning. Microsoft could easily sell this idea to the share holders, IMHO.

Mr. Nadella, are you listening ????

Sincerely,
A Long-term Loyal Microsoft customer!
 
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Why not? They already are giving windows away free and they are already doing some controversial stuff such as android appson windows. If they want the marketshare to go up,then lower the price and undercut your competitors. They technically an afford to do this since they have a lot of cash. Lumia 950 $399 and Lumia 950 xl $449 to $499 with the continuum stuff an additional option
 

Laura Knotek

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I feel that unless these devices are sold at lower price points they will not sell.

If Microsoft prices these devices comparable to the iPhone 6s/6s+ or the Samsung Galaxy S6/S6 Edge/Note 5, then they will be DOA.
 

Rose640

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Why don't you then ask them to wrap up 300$ in a box for a phone you paid 400$. I mean, no, you got a 80$ 640, and that's it. They offered a phone at a such a low cost so other platform users can experience windows for a bargain. So, nope, they won't be sold for 100$, not even in dreams, lol.
 

wpfan86

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Why don't you then ask them to wrap up 300$ in a box for a phone you paid 400$. I mean, no, you got a 80$ 640, and that's it. They offered a phone at a such a low cost so other platform users can experience windows for a bargain. So, nope, they won't be sold for 100$, not even in dreams, lol.
He didn't say they should be sold for $100. He said they should be $100 cheaper than the other phones.
 

HeyCori

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Sold at a loss? No. On a video game console you have $60 games, subscription services and other ways to make up for that loss. With $1 apps it's going to be a long time before Microsoft makes up the difference. Instead I think MS should price it as close to the manufacturing cost as they can. Basically, if it costs $500 to make then sell it for $550. Don't sell it for $700, shoot for market share instead.

Now if we're talking cheap devices (below the $100 dollar mark) selling at a loss probably isn't that bad of an idea.
 
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theefman

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Problem is Nadella has stated Microsoft is no longer interested in chasing marketshare with their phone business and instead will be moving away "from a strategy to grow a standalone phone business", in that scenario seems they would be less willing to take a loss on however many handsets they do manage to sell.
 

xandros9

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"Buying" users with that is only temporary. People value app selection and whatnot, especially if we're talking high-end phones where people are already dropping a couple/few hundred dollars.

Sure it helps in the bottom, but I'm not sure if it'll make a huge dent when we get up to the big players.
 

Rose640

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He didn't say they should be sold for $100. He said they should be $100 cheaper than the other phones.

But again, way to low.

I don't know, if i had those few hundred dollars i'd go for the 950/xl. I've no intention in switching platforms.
 

a5cent

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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.
 
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Pete

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One recurring theme lately has been the perceived lack of flagship devices. If Microsoft sells these phones at mid range prices, then it'll turn out to be damaging.

The result would be a perception that these aren't premium handsets. Also, the less would assume that Microsoft are under pricing through desperation.
 

paulxxwall

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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.
Ok so ms isn't trying to improve it market shares at all? With market share comes devs, and dev support! So if ms is content with less than 3% how will the app ecosystem improve? Now my question is @ what market share do developers become interested in making apps?
 

paulxxwall

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And this time around im not sure about forking out 800$ on a platform that's at a "we have to wait and see" situation. Bought the 920 on day one and was under the impression that WP would catch up to even pass IOS at least but not the case at all.iPhones break selling records every year.
 

EMINENT 1

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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.


This man gets it.


If you're worried about market share, buy some of the new phones and other devices. The only way devs will take notice. 100 million on 10 is a good start. So much wasted money and potential on this platform, kinda makes me wish I could write code and bank.
 

Keith Wallace

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It's something that could be of substance, but it didn't work with the 920. It launched at $450, when competing devices were $550. They then discounted it on AT&T by $50 for Black Friday, and even gave away the $50 wireless charging plate. That still didn't give them momentum. Selling at a loss won't mean jack if apps don't come. There are two major results that could hurt here, though:

1. They sell these at a loss, still can't get marketshare, and just throw up their arms in frustration while pulling out of the market.
2. They sell these at a loss, GAIN marketshare, and the books look terrible for the mobile division, as sales hurt the bottom line.

That second one becomes a question of how much MORE they want to lose on mobile devices. They might be fine existing in the 5% marketshare and turning a small profit long-term as an intriguing niche option.
 

a5cent

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Ok so ms isn't trying to improve it market shares at all? With market share comes devs, and dev support! So if ms is content with less than 3% how will the app ecosystem improve? Now my question is @ what market share do developers become interested in making apps?

W10M is not about fighting another battle for smartphone market share. It's about dealing with the consequences of a lost war.

Specifically the WP app market is dead, or at least it will be when Astoria and Islandwood are released. Those tools are MS' white flags. MS is no longer looking for WP apps, with WP's elegance or with WP specific features. Instead MS is tying WP's UI paradigms to those prevalent on iOS and Android and implementing a feature set that conforms to what iOS and Android already offer.

MS envisions a near future where many developers create their iOS and Android apps using Visual Studio, who then also deploy their apps to the WP app store when they are done. The problems of developer support for WP will then hopefully fade, as developers are no longer required to consider WP explicitly, and as the WP store evolves into extensions of the iOS and Android stores over time.

What is lost by this move? MS control over the app ecosystem on mobile. Fighting for a larger chunk of the smartphone market doesn't make sense under those conditions, because for MS, owning a part of the market share no longer comes with the ability to control it.

Universal apps will eventually help MS get back into the mobile game (hopefully), but that requires that a decent demand for such Windows apps exists on W10 first. That's where the next battle plays out... not in the mobile smartphone market.

I'm skipping a lot of important details here, but this is the best I can do for now
 
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HoosierDaddy

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MS doesn't really want to sell phones at all and does it to make sure there are some decent phones regardless of what the phone makers do. So as long as some other companies are building decent Windows Phones at a fair price OR as long as any are thinking about building Windows Phones, the LAST thing MS would want is to take their customers away by selling phones at a loss. Unless they can talk all those companies into selling phones at a loss too. It would probably even be illegal for MS to sell phones at a loss since that is hardly fair competition with those phone makers.
 

Laura Knotek

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W10M is not about fighting another battle for smartphone market share. It's about dealing with the consequences of a lost war.



Specifically the WP app market is dead, or at least it will be when Astoria and Islandwood are released. Those tools are MS' white flags. MS is no longer looking for WP apps, with WP's elegance or with WP specific features. Instead MS is tying WP's UI paradigms to those prevalent on iOS and Android and implementing a feature set that conforms to what iOS and Android already offer.



MS envisions a near future where many developers create their iOS and Android apps using Visual Studio, who then also deploy their apps to the WP app store when they are done. The problems of developer support for WP will then hopefully fade, as developers are no longer required to consider WP explicitly, and as the WP store evolves into extensions of the iOS and Android stores over time.



That is what MS has lost. Control over the app ecosystem on mobile. Fighting for a larger chunk of the smartphone market doesn't make sense under those conditions, because for MS, owning a part of the market share no longer comes with the ability to control it.



Universal apps will eventually help MS get back into the mobile game (hopefully), but that requires that a decent demand for such Windows apps exists on W10 first. That's where the next battle plays out... not in the mobile smartphone market.

I'm skipping a lot of important details here, but this is the best I can do for now
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.
 

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