Microsoft's Windows Phone to Go After the Midmarket

Can a lower-cost Windows Phone carve off a significant portion of the smartphone market?

After months of positioning its smartphone platform as the counterpoint to high-end competitors such as Apple's iPhone and some Google Android devices, Microsoft plans on aiming Windows Phone at a less-pricey market segment.

"We are dramatically broadening the set of price points in Mango-related phones that we can reach," Andy Lees, president of Microsoft's Windows Phone division, told the audience during the Asia D conference Oct. 19. "That's particularly important because going lower down in price point opens up more addressable market."

For months, rumors have circulated about a stripped-down Windows Phone OS code-named "Tango," aimed at lower-cost hardware and developing markets such as India and China. At the moment, though, Microsoft seems more focused on rolling out its wide-ranging "Mango" update, which includes some 500 tweaks and new features. The update will appear on a range of new devices from the likes of Nokia, Samsung, and other manufacturers.

Android already occupies a healthy portion of the smartphone midmarket, and Apple--despite its reputation as a purveyor of costlier mobile devices--is making moves in that segment of its own, selling the 8GB version of the iPhone 4 for $99 and giving away the 8GB iPhone 3GS for free with contract. That could elevate Windows Phone's push into the midmarket a matter of necessity. The bigger question is whether such a push will help the smartphone platform gain traction against Android and iOS, which so far have dominated the market.

Nokia could play a sizable role in Microsoft's midmarket hopes. The Finnish phone maker not only holds a reputation as a manufacturer for hardware in that segment, but--after abandoning its homegrown mobile operating systems in favor of Windows Phone--it needs to make a substantial push in that direction in order to reverse its current market share declines. (Nokia's most recent earnings report detailed net sales of $12.3 billion for the third quarter of 2011, a year-over-year decline of 13 percent, with operating losses of $98.4 million.) A push buttressed by Windows Phone. 

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