Should New Lumia Devices be sold at a loss ?

[hb1x]

If you develop for Windows 10 you develop for the 900 million users that are expected to come over from Windows 7 and Windows 8.1 to Microsofts latest and greatest within the next 11 months that the free upgrade plan will be available. The current 100 million Windows Phone users are more like icing on the cake.

It's time to wake up brother. Don't fall for the numbers MS tell you. Windows store is good only for the phones. Desktop users hardly use the store. Ask any universal app developer and they'll tell you the truth. The developer of Poki openly stated it once that making Poki an universal app hasn't improved its sale a bit. He even said that he'd rather make a win32/classic Windows app than a Windows store app.

 

[uncle_maxim]

Why do people quote such a nonsense figure?

In modern economics cost includes everyhting - from R&D to storage and transportation. So yeah, it pretty much reflects everything. The companies ain't that stupid to calculate cost of assembly separately from R&D expenses.

If you develop for Windows 10 you develop for the 900 million users that are expected to come over from Windows 7 and Windows 8.1 to Microsofts latest and greatest within the next 11 months that the free upgrade plan will be available.

I heard a similar story about WP8 back in late 2013

 

[zkyevolved]

All consumer electronics cost virtually nothing to manufacture !!!!

Manufacturing a CPU costs practically nothing, yet getting it to the point where you are able to have a functioning CPU roll off the production line often costs billions!

It boggles the mind to see how you guys, despite theoretically understanding that this is no different for smartphones, can then turn around and claim all the work that went into engineering these devices should just be ignored. C'mon! It's nonsense..

I actually MENTIONED that in my post. But ... OK... Regardless, the SAME R&D goes into the iPhone product,s and yet the iphone 4 was launched at a retail price of 599... It's INCREDIBLE how you, with the theoretical understand of how to comment my comment mentioning the same thing I mentioned, can not see how prices are marked up just because they can. Same R&D, manufacturing, pieces (basically, at the time 16gb cost the same thing that 64 today does, probably, and screens! don't even get me started on screens!). All I'm saying is that Microsoft should NOT follow Samsung and Apple and charge 800 euros for a device. Any layman would go to the store and would see "SAMSUNG galaxy blah or APPLE iPhone" with HUGE ecosystems, and years of support, followers, and popularity... And then there is Microsoft who is really launching its very first premium cell phone with an ecosystem that scares developers and dwindles... So, yes, as my original post stated: Microsoft, don't over charge for your device like Apple and Samsung CAN because they're what's in.

You could just as well say that the price of a smartphone should never be more than $10, because that's what postage and packaging costs you. This is similarly drawing a line accross the path that must be travelled to get a smartphone into consumer's hands, and ignoring all the costs associated with the steps that came before it. Drawing that line just before manufacturing is just as arbitrary and ridiculous as drawing it just before postage and packaging!

Are you OK?? How on earth did you get that 10 dollar gig? $10??? ... Lol. I think saying that my LG G4 which costs now 430 euros, which still generates an INCOME for LG is A LOT less than 800 euros for other devices. If LG can do R&D and manufacture and ship and advertise their device and make a profit selling their G4s, which by the way are selling VERY VERY well according to their latest reports. So yeah, $10 is your absolutely absurd exaggeration, but 400-500 euros for a premier device is not out of the question, especially for a struggling mobile division that can't really get their foot in the door. Look at OnePlus One and Two! They sell VERY good hardware with a GREAT software experience for a fraction of the cost of Samsung, Apple, HTC, etc.

If you're just going to flat out ignore all the engineering work that went into these devices, why stop there? Why not ignore manufacturing costs too? After all, selling for $10 is better than selling for $160. Right?

There is absolutely no logic to this...

I actually believe you're the only one who is ignoring it... which by the way only means you didn't see this:

Which includes manufacturing .... So... BOOM! Good bye

 

[anon(5383410)]

The issue here is that some of you speak of the avergae consumer as if they're as knowledgeable about the product as you are about Windows Phone. You should be thinking about hipsters and those who simply want what's either perceived as cool or exclusive. Part of the marketing that goes into that involves pricing it inline with it's competitors. If those $120 jeans that youngsters buy only cost $60, they wouldn't but them. They won't come right out and admit that price was a factor and in their defense sometimes it's subconscious. The price DID play a factor though.

If they only want the members of Windows Central and the small percentile of Windows Phone enthusiasts to buy the phone then sure, lowball. To everyone else it won't be as sexy if it's priced in the range of the rest of the uncool, not sexy devices.

 

[DavidinCT]

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.

For them to say they are not interested in chasing Market share, is 100% BS. If they are not chasing market share why even make Windows Phone ? The market is clearly showing that iOS and Android are outselling Windows Phone every day. So, they invest BILLIONS in Nokia but, they have no interest in Market share ? Really ? Are people that clueless to believe that for one second ?

It comes down to basic math, Microsoft owns the Windows Phone store, when you sell an app, Microsoft makes a profit (Just like Apple does and Google does)., if your not selling phones (aka building market share), the apps will sell less and in turn make less money. Microsoft is a business above anything else, if it's not making them ANY MONEY and it keeps LOSING MONEY, for them, it would be a multi billion dollar tax write off. We are not talking a little mom and pop shop, we are talking a global company who is involved in business in every country in the world, that makes many billions of dollars a year. They make large investments like this all the time (maybe 2 times a year) and if they don't turn a profit, or they use their tech for something of their own, they sell or close them down.

Microsoft has been pushing low end phones for a few years now, why do that ? Think about it, How to make market share is to flood the market with lower price point phones, more people with less income will jump at a full featured smartphone with at this price point, and there are a lot of "well off" people who just want a phone, that does "smartphone" features but, with a low cost because they don't really care about them that much. Again, business 101 would see what they are trying to do with this.

Now that they captured (or competing very well) in the low end market, now it's time to make 2 super high end phones. These HAVE to be true flagships, to go HEAD TO HEAD to the iOS and Android offerings in this segment. Anything less would be a disappointment for anyone who is buying phones at this level. Don't worry with the feature set that they are claiming, it should be able to go HEAD TO HEAD with them.

I am someone who watches this market very well, they will sell these phones for a loss but, only to hit a price point. I see the 2 models being priced about $50-75 less than the iPhone models (6 and 6+) and same in the flagship Android devices in the FULL retail price area. If the iPhone 6 is $199 (on contract) and the 6+ is $299, then you will see the 950 for around $130-150 and the LX to be in the $200-250 range.

All the talk about this is interesting, think your getting a 950xl for $300 at full retail, that is not going to happen, they will be VERY aggressively priced but, directly priced under the big competitors that they are going head to head with.

No matter what everyone thinks, Microsoft as a company is not dumb, they have 100's of people studying the marketplace, they know EXACTLY where these need to be priced at to make them FIT in the marketplace. Too much and they wont sell, to little and they get the thought of it being a lower end cheap phone.

So, all in all, expect these phones to be full retail priced about $50-75 less than iOS, or Android flagships. I would be shocked if it was less by much and if it's more, they could be shooting themselves in the foot.

It will be interesting to see how it plays out...

 

[Bloobed]

No.

I'm sure it's been said before, but at this point the problem is the Windows Phone OS and ecosystem, and the perception of them. Going cheap would only strengthen the perception that there is less inherent value in WP. That tactic might have worked 3-4 years ago (same with the low-end barrage), but not with the established ecosystems of today. It's also not comparable to Nexus phones which are a rotating OEM -endorsement -system. At this point ,the ones considering 950/XL will purchase them or mid range versions even without low pricing.

 

[a5cent]

For them to say they are not interested in chasing Market share, is 100% BS.

Maybe the term "interested" isn't quite right. Nadella wasn't kidding when he said that he no longer considers WP to be in competition with iOS and Android however.

MS surely wouldn't say no if W10M suddenly grabbed a lot of market share, but MS will no longer be chasing it. That's what being "not interested" meant. There will be no more multi-hundred million dollar marketing campaigns. There will be no more attempts to flood the market with phones. There will be no more huge investments into the smartphone sector. All that is over.

WP is along for the ride, and may eventually play a role as an enabler for some alternative strategy to enter the mobile market, but the view that W10M as a smartphone OS, is being pitting directly against Android or iOS in a bid for consumer favor and market share.. that chapter is over.

Of course MS has other ideas on how to become more relevant in the mobile sector, but W10M / smartphones won't be the business unit leading that charge.

 

[ymcpa]

The subsidized model has been replaced with the leasing model. After Apple announced their program, all the carriers followed. You trade in your old iphone and get a new one for a low monthly fee and you can replace the phone every year or the do the installment payments for 24 months. No one is buying these phones upfront. So, even though the carriers finally separated the cost of the phone from the plan, people still make monthly payments for it. They are too stupid to see that these phones are perfectly fine after 2 years and they could save a few hundred dollars by buying the phone and using it longer than 2 years. It's the old lease vs buy debate. Buying is always cheaper over the long term but leasing is cheaper currently and it gets you a new device more often. Selling the phones at cost won't have any effect. All people see is that they are paying and $30/ mo for the iphone. A windows might be $19/mo but people will think that $11/mo is no big deal. They don't see that it is a $264 savings over 24 months. They also probably won't notice that with an iphone you have to pay an extra $100 to get a usable amount of storage.

 

[Michael Alan Goff]

In modern economics cost includes everyhting - from R&D to storage and transportation. So yeah, it pretty much reflects everything. The companies ain't that stupid to calculate cost of assembly separately from R&D expenses.



I heard a similar story about WP8 back in late 2013

And all of it is still an analyst guessing.

 

[DavidinCT]

Maybe the term "interested" isn't quite right. Nadella wasn't kidding when he said that he no longer considers WP to be in competition with iOS and Android however.

MS surely wouldn't say no if W10M suddenly grabbed a lot of market share, but MS will no longer be chasing it. That's what being "not interested" meant. There will be no more multi-hundred million dollar marketing campaigns. There will be no more attempts to flood the market with phones. There will be no more huge investments into the smartphone sector. All that is over.

WP is along for the ride, and may eventually play a role as an enabler for some alternative strategy to enter the mobile market, but the view that W10M as a smartphone OS, is being pitting directly against Android or iOS in a bid for consumer favor and market share.. that chapter is over.

Of course MS has other ideas on how to become more relevant in the mobile sector, but W10M / smartphones won't be the business unit leading that charge.

Yea, I agree but, on the other side of it, they are clearly interested in Market share due the facts I claimed. If they didn't really care, why create Universal apps ? Why create a plugin to port iOS and Android apps directly to Windows phone ? Why even create these *new flagships* ?

They are pushing Windows 10 (PC) really hard and if Windows 10 does really well, I think their end goal here Windows 10 does well, Devs use the quick mod to their apps to make them Universal apps, WP gets more apps, and in the end sells more phones. It's showing that Windows 10 Mobile COULD be the last OS for them on the mobile market, they are really counting on this to work.

No question, there is a BIGGER story here, would love to hear in to one of their corporate meetings about this subject.

I hope they are after market share, I really do, as a Windows Phone user, more phones that sell, mean more apps, and make ME enjoy Windows phone more.

Again, as a WP fan, my eyes and hears will be on this announcement in a few days, I guess more details will be laid out then.

 

[gourav mopidevi]

first Microsoft should decide what it wants to sell is it windows phone 10/hardware.......there wont be any loss they must lower their profit margin for each device they sell same like xiaomi/one plus one other Chinese oems are practising this method and I feel its good as our competition is with android right now not with iPhone initially Samsung release flagship for high price but after 3months it drops its price drastically where as Chinese oem release their device with same spec at lower price and they maintain initially released price for device life cycle with only slight 1/2 drops in price......this method works only for unlocked device(so no carrier devices) for carrier devices/countries they can build two flagship one for carrier countries another one for no carrier countries...for carrier countries they must build premium device for premium price where as for no carrier countries they must introduce some ugly device like L950 with same hardware like in premium device....after device cycle without wasting resources on no carrier countries they must release same premium device with upgrade specs and concentrate on carrier countries.......

 

[920Walker]

Samsung is spending a big amount for the promotion of its Galaxy S6, S6 Edge and Note lineup. All these are Samsung's Flagship devices. Microsoft have Lumia Icon, Lumia 930 and Lumia 1520 to compete with Samsung's Galaxy and Note lineup. But, have you ever seen any advertisement to promote these Lumia flagships? Microsoft is busy in promoting Lumia 540, 630 and 535 like low end devices. You are promoting your low cost devices and want profit from your Flagships. Is this right?

.

The Lumia Icon and 1020 were heavily advertised on TV in the US. They are the most recent flagships. The 1520 is huge and at the time was more of a niche product. I'm not sure if Nokia or MS were more responsible for the ads.

 

[phelme]

There seems to be a misconception as to the measurement of an item's value. The value is not the cost of production plus a little markup for profit. Any retailer will tell you that the value of an item is what the consumer is willing to pay for it.
...
If Apple can sell 13 million iPhones in one weekend for $800 each, then obviously the value is there.

Leo LaPorte and panel on TWiT.tv last weekend made the observation that the iPhone is now seen as a full-on fashion accessory and Apple is marketing and pricing it accordingly.

Microsoft has no such luxury, though the TSA agent at Boston-Logan who went through my backpack a couple days ago was quite impressed with the size of my 1520 and declared it the largest phone he's ever seen... so there's that. :winktongue:

 

[phelme]

The Lumia Icon and 1020 were heavily advertised on TV in the US... I'm not sure if Nokia or MS were more responsible for the ads.

I actually see a fair number of TV ads for (low-end) Lumias in the US; not sure where this idea comes from that MS isn't trying to get the word out on them (this is in the San Francisco market). Though I imagine for the few that actually become interested enough to head to their local cellular retailer to check them out, a road block of "Windows Phone negativity" is there to greet them on the sales floor and they are steered elsewhere.

 

[luxnws]

first Microsoft should decide what it wants to sell is it windows phone 10/hardware.......there wont be any loss they must lower their profit margin for each device they sell same like xiaomi/one plus one other Chinese oems are practising this method and I feel its good as our competition is with android right now not with iPhone initially Samsung release flagship for high price but after 3months it drops its price drastically where as Chinese oem release their device with same spec at lower price and they maintain initially released price for device life cycle with only slight 1/2 drops in price......this method works only for unlocked device(so no carrier devices) for carrier devices/countries they can build two flagship one for carrier countries another one for no carrier countries...for carrier countries they must build premium device for premium price where as for no carrier countries they must introduce some ugly device like L950 with same hardware like in premium device....after device cycle without wasting resources on no carrier countries they must release same premium device with upgrade specs and concentrate on carrier countries.......

In the U.S., iOS is the trendsetter. Guess it depends where Microsoft thinks it will make the most return on its money. Notice that the October 5 event is being held in NYC and not at an event in another country.

Somehow I doubt Microsoft is going to try to go toe-to-toe and slug it out with Chinese manufacturers like Xiaomi for the consumer market in China. They are going to get third party manufacturers to bear (or share) the risk of selling the hardware. That's why Microsoft wrote off all or nearly all of the Nokia acquisition. They don't want to take big losses for the sake of chasing market share in relatively low margin hardware business that doesn't have the brand name of an Apple.

 

[a5cent]

Yea, I agree but, on the other side of it, they are clearly interested in Market share due the facts I claimed. (1) If they didn't really care, why create Universal apps ? (2) Why create a plugin to port iOS and Android apps directly to Windows phone ? (3) Why even create these *new flagships* ?

1. IMHO it's not correct to say that Universal apps were conceptualized as a means of "saving" WM. Microsoft set their various versions of Windows on a path towards unification long before the iPhone hit the market. Most of the things that make up the UWP today started life as part of Windows Vista. I agree that Universal apps must play an important and successful role in the W10 ecosystem if WM is not to fail, but the concept doesn't exist because of WM. MS would definitely have preferred that their mobile efforts had long lead to a more meaningful share of the market, without all this responsibility now resting on the UWP's shoulders.
2. That's not a play for market share. That's WP's capitulation and the main reason why MS is no longer chasing market share with W10M. The more successful Islandwood and Astoria are in stimulating app activity in the W10M store, the less relevant W10M becomes to MS as an OS. Islandwood and Astroria sacrifice MS' ability to control their own ecosystem, protect their turf, and to innovate in meaningful ways beyond what their competitors have already done (conformity ties W10M to iOS and Android at the hips), in exchange for W10M remaining a viable product in consumer's eyes until universal apps (not iOS or Android sourced apps) become more widespread and can fill in more of the holes.
3. Because MS can't sell their UWP vision without offering UWP compatible hardware in all standard form factors. I don't want to get into more details here. Either way, chasing market share is the absolut last reason to make a high-end smartphone. The reason Apple's worldwide market share has now dropped below 14% is because they only have phones on offer that most people deem too expensive. The L950/XL have no snowball's chance in hell of moving the needle as far as WM's market share is concerned. None. That's not what they are here for. They're only purpose is to keep the ball rolling... for now...

Obviously, MS does want a bigger part of the mobile pie. As far as I'm concerned though, W10M is now on the reserve bench. It's just there. MS' UWP vision just isn't viable without a low-cost, small form factor, touch device capability, so MS has no choice but to keep W10M moving along, and they will do that for as long as they remain in the personal computing business. Rather than pushing W10M, MS will instead be pushing UWP, which may or may not relate to phones. If the fruits of those efforts at some point trickle down to W10M, then all the better for it... if that trickle at some point becomes a stream, then MS can eventually bring W10M back into the game... until then... reserve bench. That's where this notion of "not being interested in market share" comes from.

That's how I see it.

 

[Joe A]

Selling these devices at a loss is a tricky situation, Microsoft has a fiduciary responsibility to make money for its stock holders , losing money on a business model is acceptable for some period of time but not indefinitely. I feel that most cell phones like the iPhone 6 are overpriced and Apple makes more than a handsome profit on the product. But they can and do command those prices for now. Yes Microsoft has billions in the bank, but if they can't sell mobiles phones at profit after some time, especially if they have some sort of long term goal of establishing a new product category , then the 950 line my be priced to sell no matter what, but at some point they have to turn an acceptable profit on those phones, or what ever they end up becoming has to contribute to the bottom line, otherwise it will be time to stop committing resources and funds to the product.


Sent from my iPhone using Tapatalk

 

[MDboyz]

They need to look at BlackBerry, and learn from it. It didn't work when you priced your phone the same or higher than iPhone, and Android. You are trying to catch up, so you have to spend money to close the distance.

 

[melhiore]

Not necessarily at loss but well priced. If the price will hit iPhone 6s brackets, I will go for iPhone just because ecosystem is great. For me the choice is simple. All MS apps are available on the iOS and these look way better than native Windows stuff...

 

[PsycheEye]

Not necessarily at loss but well priced. If the price will hit iPhone 6s brackets, I will go for iPhone just because ecosystem is great. For me the choice is simple. All MS apps are available on the iOS and these look way better than native Windows stuff...

This is what really bothers me..
There are several cases where native Windows Phone apps look worse and are worse on Windows Phone than on Android and iOS. Skype for example.. I haven't used it in a while on Windows Phone, but less than a year ago it was horrible on Windows Phone when compared to for example Android.

If someone can explain why Microsoft release and maintain their own apps better on other systems, then please do. 'Cause i really want to know..........