Microsoft Aims to Support Higher Prices for Window Phone Applications
Microsoft Corp. (MSFT) will support higher prices on mobile-phone applications from outside developers to encourage better products, rather than embracing the free or 99- cent apps common in other companies' stores.
Context & Ripple Effects
Microsoft's pricing stance lands mid-way through its Windows Phone build-out: it laid out a developer strategy for the next-generation phones back in 2009, loosened Windows Phone Marketplace terms to admit more open-source licenses in February 2011, and reportedly committed more than $1 billion to Nokia the following month. The store is being assembled piece by piece, and terms are the lever.
The Bloomberg report frames price as part of that assembly: rather than matching the free or 99-cent apps common in rivals' stores, Microsoft will support higher prices from outside developers, betting that richer per-app economics attract better products.
First-order effects
- Third-party developers selling on Windows Phone Marketplace can price above the 99-cent norm, changing the revenue math for anyone porting an existing app catalog to the platform.
- Microsoft positions its store against Apple's and Google's low-price conventions at launch-critical moment for a marketplace still filling its shelves ahead of the Nokia hardware push.
Second-order effects
- Developers weighing where to ship first get a new variable beyond install base: if higher prices hold on Windows Phone, per-download revenue could offset smaller volumes, pressuring rivals' store terms.
- The move raises the bar for what consumers expect to pay on the platform, which cuts both ways — fewer impulse purchases but potentially a higher-quality catalog to market alongside the Nokia devices.
Third-order effects
- If premium pricing proves viable, app-store revenue splits and price floors become standing competitive weapons in mobile platform wars rather than fixed industry defaults.
- Store terms — licensing, open-source allowances, pricing — emerge as the main policy surface through which Microsoft differentiates a third-place mobile ecosystem.
The trend: Mobile platform competition is shifting from hardware specs to app-store economics, with Microsoft using developer-friendly pricing terms as its wedge into a market defined by Apple and Google.