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Microsoft promises cheaper Windows phones

Software king of the world, and now the proud new owner of Nokia, Microsoft is promising that there will be super cheap Windows phones in the shops soon.

While at the Computex trade show in Taipei, Microsoft’s Nick Parker, who handles the company’s partnerships with device makers, told PC World  the new handsets could be out by the end of the year.

Current models are between $400 and $699, the new phones would have price points in the sub $200 to $300 range.

He didn’t identify the manufacturers that would be bringing the phones to market, but are nine companies Microsoft signed up to its Windows Phone development program earlier this year.

These are Nokia, Samsung, HTC, Huawei, Foxconn, Gionee, Lava (Xolo), Lenovo, LG, Longcheer, JSR, Karbonn and ZTE.

Microsoft hopes that some of its new chums will be able to use their significant market share in developing countries and these phones need lower prices to do well.

Microsoft launched the latest version of its Windows Phone operating system, Windows Phone 8, in late 2012 to critical praise but limited public interest. Windows Phone 8 has been slowly increasing its market share since and has about three percent of the market.

If Microsoft breaks into the developing market though with cheaper phones it could represent a huge payday for the company.

IDC forecasts Windows Phone will continue to increase its market share to hit 7 percent in 2018, but that is if things stay the same as they are now. What is fairly clearly that if Microsoft is going to make itself cheap and cheerful, it does not want things to stay the same. 

Microsoft ready to re-Surface

After taking over from the shy and retiring Steve Ballmer, the decidedly more noisy Satya Nadella has had a calm first 100 days as Microsoft Corp chief executive.

But the word on the street is that he will hit his first rough patch next week when unveils the latest models of the tepidly received Surface tablet.

Shareholders have thought that Nadella’s “mobile first, cloud first” strategy is a good start and when ever talked about the software maker as a “devices and services” company the share price rose.

But Microsoft is expected to unveil the third generation of its Surface devices and show off a smaller tablet, to address the fast-selling lower end of the market dominated by Apple’s iPad mini, Amazon Kindle Fire, Google Nexus and Samsung’s Galaxy range.

And this is where Nadella has a problem – Vole lacks the devices that can make a dent in the market. Vole’s Surface, launched in October 2012, has only 2 percent of the market and the Surface tablet, while nice, was expensive.

If Nadella does make a smaller cheaper Surface, then he will get stick from those who think that Vole should still to the high end, even if that cunning plan had not worked. But the “expensive tablet” pundits point out there are signs that Microsoft’s Surface Pro 2 is starting to attract Microsoft’s core business customers as an Ultrabook replacement.

However, Nadella has his work cut out for him. ValueAct Capital led the shareholder revolt last year and has consistently lobbied against Microsoft’s hardware effort, including its costly acquisition of Nokia’s handset business. 

Microsoft losing millions on Surface

Software giant Microsoft is losing a fortune on its Surface line of tablets.

Computerworld  has been looking into Vole’s filings with the US Securities and Exchange Commission and found that Microsoft reported $494 million in revenue from the Surface line in the latest quarter.

That sounds good but the actual cost of revenue was $539 million, which means that it lost $45 million in the quarter from Surface. It should be doing better after being in the market for a while, but the loses are $6 million more than the previous quarter.

In the last nine months, Microsoft spent $2.1 billion on the Surface, and gained $1.8 billion in revenue, meaning a total loss of $300 million. The biggest loss came in the September 2013 quarter, some $216 million.

It is not clear how Microsoft is able to lose so much on the Surface. We would understand if it was cheap, but the fact it is so pricey that it makes the iPad look cheap.

The Surface 2 Pro starts at $899, and the RT-based Surface 2 at $499. The cheapest iPad Air sells for $499.

Vole might say that the Surface will bring in additional revenue because it uses Microsoft services such as Bing, Bing Maps, OneDrive, and Outlook.com email. Yep they are not great money spinners either.

The question then is what is Microsoft going to do? It needs the Surface for its mobile strategy, our guess is that it will have to work out a way to make them for less.  It might take a leaf out of Google’s book.

Microsoft plans to launch Surface Mini later this year

The dark satanic rumour mill has manufactured a hell on earth yarn that Microsoft’s Surface Mini will be ready to ship sometime this year.

The mini is Vole’s 7 to 8-inch Windows tablet but Microsoft cannot work out how to market the gear.

Competing 7 and 8-inch tablets are all about pushing content to users and are usually heavily subsidised. But Microsoft wants to sell the gear as the ultimate note-taking device. That means access to OneNote, new apps or software tweaks, and support for a digital pen.

It is rumoured the Surface Mini will be a smaller version of the other Surface tablet and feature a built-in kickstand like the rest of the Surface line, though if Microsoft is positioning this tablet as a note-taking tablet that will be a bit of a chocolate teapot.

Microsoft considered launching the Surface Mini year but gave up when the Surface 2 release was hit by supply chain issues. If Vole does release the product in summer it could be just the sort of toy which could catch the imagination of users. Or else it could just tank until it is re-discovered and marketed by Apple, much like every Microsoft innovation.

Also in the rumour mill is one which says that Vole is developing prototypes for a smartphone that would have shared the Surface branding that Microsoft uses for its tablet products.

The project is being overseen by Terry Myerson, who is currently the head of all Microsoft’s operating system projects. Ironically, Myerson stated back in April that the company would only consider making its own smartphone if third party OEMs were “not providing the consumer experience we think is possible with our platform”.

Apparently, they aren’t or now that Microsoft owns Nokia it needs to get some products out of its own.

To give you an idea how long Microsoft has been working on this project in September 2012, the benchmark app WP Bench detected the use of a device that it identified as “Microsoft Surface Phone”. In November 2012, the company posted up a render of an unnamed Windows Phone device on its Facebook page.