Why doesn't Microsoft increase market share for it's mobile OS by giving their phone away?

If Microsoft is serious about getting out from under it’s status as a distant also ran in the phone OS wars why doesn’t it use some of it’s huge cash flow to discount the phones for users who cannot (or not wish to) lock into a 1-2 year plan?

It’s a common scenario for a person (or their kids) to lose or damage a phone that’s in a standard 1-2 year plan , not have insurance coverage or an upgrade option left, and be looking at $500 - $700 for a new replacement unless they choose to go used on ebay, and even then the latest phones are still hundreds of dollars.

In these and related scenarios why doesn’t MS offer their new phones without contracts at $ 100 or less for year or two. Yes they would lose money on the front end, but they could buy a fair chunk of market share. Is this worse than trying to compete at market pricing rates (and apparently failing) crawling along at a tiny market share and then eventually having to shelve the whole phone competition plan and taking a gazillion dollar hit later down the line?

They do here in Canada. I just took a look at Best Buy and they had pre-paid Lumina 520 and 620 phones for as low as $99.


I checked Best Buy US and they had a Lumina 521 on T-Mobile for $99 no contract.

I bought an iPhone 4 and free $50 gift card from Walmart’s no contract Straighttalk.com plan for $50.

So the phones people actually like are already available for free or low cost without any contract subsidy.

If Microsoft wants to get in on the mobile market they’ll probably have to use their giant cash flows to pay people to use them.

I own a lumia 920, previously I owned iphones when I was in between dumb phones and wanting a successor to the pda/phone.

The simple fact is that its apples market to lose, microsoft got in the market too late and now its an also ran , well below Android and even Blackberry. If they want to make serious inroads, then they are going to have to keep making devices and simply let time take care of market share.

At one point, BlackBerry was dominant with Palm being a close second. Now, BB is on life support and Palm is gone. Wether this translates to the phone market, is to be seen.


I understand but staying with one family plan is a significant convenience and you still have the 1-2 year contract obligation even if the phone is damaged or dead. You cannot walk away from your plan. This allows the purchaser to keep a top line smartphone in the plan without having to shell out 300-500 dollars for a replacement or getting an entirely separate service.

But anyone on Verizon could have gotten the iPhone 4 for $0 after a $50 gift card from Straighttalk and used it on their Verizon family plan. It was a nice free unlocked iPhone. There was no obligation to actually use it with Straight talk. I guess I did buy a 30 day service card too, but that puts the total cost at $45. I’m sure AT&T customers can get dirt cheap unlocked iPhones and high end Android phones too.

There’s clearly a big market for the newest and best iPhones, probably driven significantly by the subsidies that come with 2 year contracts. But I think creating such high quality phones is going to eventually cause trouble for Apple, as people realize they can get totally adequate phones for free. By the same logic, these dirt cheap or free iPhones will crowd out Microsoft’s free phones. Why use a Microsoft phone for free when you can use an iPhone for free?

The 520 is frequently available (AT&T only) for about $50 here in the US, too.

To answer the OP’s question, the real answer is twofold. The first is that if you give something away, people tend to ascribe less value to it, and it’s important to Microsoft that Windows Phone be (and be seen as) a real competitor to the other phones.

But the more important answer is: because there’s currently no such thing as a “Microsoft Phone.” Windows Phone is an OS that’s sold to OEMs (mainly Nokia, but several others, as well), who design the actual phones and get the say over what they look like, act like, and are priced at. Then the carriers come in and dictate their own needs. By the time you’ve got a “Windows Phone” in your hand, it’s several steps removed from Microsoft.

If/when the Nokia merger goes through (Microsoft recently made an offer to buy Nokia’s phone division), this dynamic may change, but right now Microsoft has the same relationship with handset manufacturers and carriers for Windows Phone that it does with computer manufacturers and Windows. They pay Microsoft for the use of the OS, and then Microsoft is basically out of the picture.

ETA: I work for Microsoft in a WP-related capacity, but I don’t, of course, speak for them.