Microsoft is reported of “may spending as much as a billion dollars to subsidize the expense of building phones and apps, so that Windows Phone 7 ecosystem is well-seeded at launch”. Jonathan Goldberg of Deutsche Bank, estimates that Microsoft will spend $400 million on marketing alone for WinP7 launch. That doesn’t include the millions it has already committed to pay for “non-recurring engineering” costs that help offset development costs for handset manufacturers.
On a visit to Redmond, Goldberg says company executives told him that Microsoft, along with its carrier and manufacturing partners, would likely spend “billions” of dollars in first year for marketing and development. Another source familiar with Microsoft’s manufacturer and carrier agreements says the company will spend $1 billion on the launch, half on marketing and half on other development costs.
“We’ve a long-term view and Microsoft has been in this position before in other businesses where we’ve had to take a long-term view,” says Microsoft’s Greg Sullivan, who wouldn’t comment on the estimates. “The mobile phone market is growing by leaps and bounds, but it’s still in the early stages.”