Microsoft To Pay More Than Half A Billion Dollars To Jump-Start Windows Phone 7
Editor's note: The following guest post is by Kim-Mai Cutler. — Nearly four years after Apple launched the iPhone and two years after Google open-sourced the code for its Android operating system …
Context & Ripple Effects
Microsoft's commitment of more than half a billion dollars behind Windows Phone 7 lands a nearly four-year gap after Apple launched the iPhone and two years after Google open-sourced Android's code — a window long enough for both rivals' app ecosystems and carrier relationships to harden. The payment is an admission that in mobile operating systems, being technically ready is not the same as having a market: Microsoft is buying the developer attention and shelf space it could not earn organically while it rebuilt its phone platform.
First-order effects
- Windows Phone 7 launches with a war chest instead of an installed base, letting Microsoft subsidize its way into carrier lineups and developer pipelines where Apple and Google already hold both.
Second-order effects
- Apple and Google can answer without writing comparable checks — Apple through hardware-integrated lock-in and Google through free, open-sourced distribution — forcing Microsoft to keep spending to hold any share it wins.
Third-order effects
- If cash subsidies become the price of entry for a third mobile OS, the market structurally favors players with deep balance sheets, and platform competition turns into a contest of sustained burn rates rather than product cycles.
The trend: Mobile operating system competition is shifting from technical differentiation to capitalized ecosystem-buying, where late entrants pay outright for the developer and carrier gravity incumbents accumulated by default.