Microsoft: Android Is More Expensive than Windows Phone

It was all touched off by a classic bit of know-nothing blogosphere silliness: A prominent Silicon Valley blogger claimed that Microsoft's mobile business was "fatally flawed" because—get this—the software giant actually charges handset makers a small per-unit fee for its Windows Phone software. "That game is over for good," he-who-shall-remain-nameless claimed.

As proof, he cited Google giving away its Android software—one reason why Android is "rapidly taking over the smartphone world." Meanwhile, Microsoft is charging about $15 per unit. How in the world will Redmond ever compete?

How, indeed. As is typical of such insular, one-sided arguments, it conveniently leaves out the more important part of the discussion—that is, the other costs involved. And when you look at the actual costs of Android smartphones, what you discover is that, sure, the core Android OS is "free," but the rest of the software and device development is quite expensive.

In response to this bizarre blog post, Microsoft has apparently issued an anonymous retort to the blogger, which—you guessed it—was published by the same blogger. That's an interesting combination of "the tail wagging the dog" and "milking the same cow twice," if you'll excuse the animal idioms. But then, blogging is inherently lazy.

Anyway, here is Microsoft's alleged explanation of why Android is actually more expensive than Windows Phone.

1. No handset makers use the free, stock version of Android on their devices. Instead, they must independently improve the software and add their own applications, incurring the cost of doing so.

2. Based on Linux, Android is subject to the same (Microsoft-based, it should be noted) intellectual property infringement lawsuits as any other Linux version. And these lawsuits are so expensive to infringers, Microsoft notes, that most simply license the technology separately from Microsoft. Meanwhile, Microsoft indemnifies all Windows Phone partners against IP suits. Google doesn't offer any legal protection for Android customers.

3. The Android market is already hugely fragmented, with multiple OS versions and multiple, unique devices with unique hardware and device driver issues. "Mobile devices need drivers for their various components—screen, GPS, WiFi, Bluetooth, 3G radio, accelerometer"—device drivers that Android partners need to author for themselves, incurring additional upfront and support costs. Microsoft authors and supplies device drivers for Windows Phone.

4. Unlike Windows Phone, Android doesn't have a plug-in architecture for those partners that wish (or need) to add code to the system. So, when it comes time to deliver Android OS updates or other updates, every single Android device requires unique development, and many partners are simply skipping adding updates because of the costs. Windows Phone partners don't have to roll their own updates.

5. Although the core Android OS is "free," many of the features that Microsoft includes in Windows Phone aren't available for free on Android, so Google partners would need to find and integrate, license and pay for, or even independently develop alternatives. Examples include office productivity software for viewing and editing, audio and video codecs, and high-level location services.

6. Windows Phone supports automated testing for Quality Assurance (QA) purposes. Android doesn't, so Android partners are on their own when it comes to that phase of handset development.

7. Windows Phone includes a cohesive, modern, and extensible UI, with Zune, Xbox Live, Exchange, and Visual Studio compatibility. Android customers need to duplicate all of this functionality themselves.

All of that is reasonable—more reasonable than "$15 is more than free"—but the point here is simple: You get what you pay for. And yes, Android is "free." But Windows Phone will offer handset makers, software partners, and customers a much more seamless and cohesive experience out of the box than does Android.

The broader point, however, and perhaps the more important point, is that you shouldn't believe something simply because it was published on the Internet. The anti-Android argument is far more compelling and believable than the argument that Microsoft is doomed because Windows Phone isn't free, which was published earlier. But they're both from the same source.

Ultimately, I don't think either of these issues—Android's "freeness" or Windows Phone's approximately $15-per-unit cost—will have any affect on the future success of either platform. Both platforms incur some development and ongoing support costs at all levels of the supply chain. And for the typical US consumer, any smartphone is going to cost approximately $2,000 over a typical two-year contract. The real concern for real customers isn't what went into making the devices; it's what they get out of them. And in that very real-world market, the opinions of any blogger are pointless background noise. Just let the market decide: Consumers will buy the devices they want.

(In an unrelated but potentially ironic twist, Microsoft this past week released a version of its Bing app for Android smartphones, but only those that are sold through Verizon. Why only on Verizon? As a major Microsoft partner with a Bing search agreement, Verizon has agreed to offer the free app through its online marketplace and will bundle it on new Android phones in the future. But the deal isn't exclusive, and other carriers are free to offer the app as well, as is Google.)