Has Microsoft Learned Nothing?

    By Chris Bledsoe, The Motley Fool
    Posted 1:07PM 02/05/12 Posted under: Investing

    The following video is part of our "Motley Fool Conversations" series, in which developer Chris Bledsoe and senior technology analyst Eric Bleeker discuss topics around the investing world.

    In today's edition, Eric and Chris look at reports from ZTE that give a licensing costs for Microsoft's Windows Phone. Eric finds the licensing costs, which were reported at $23 to $31, to be overly excessive. Especially with companies like ZTE that are targeting growth in the Chinese smartphone market, where prices can dip down into the $100-per-unit range, that's too steep a cost when there are free -- aside from patent litigation -- alternatives like Android. Eric thinks Microsoft hasn't evolved yet from its historical business model, where software is charged on a per-license basis. For a company that's deeply behind in the smartphone game, Microsoft would be better off licensing Windows Phone 7 for less and hoping it can make back the money through deeper integration with its Web services and other business lines. The alternative to this strategy is an increasing irrelevance in the mobile space.

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    At the time this article was published Chris Bledsoe owns shares of Google. Eric Bleeker has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

    Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


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    Sameer R

    +1 will Mark Gibbs. I am sorry but this whole emotional speech about Microsoft learning nothing is plain dumb.

    February 06 2012 at 1:18 PM Report abuse rate up rate down Reply
    patoeser

    I agree. Microsoft did most of the early tablet development and R&D in the early years before smartphones and tablets caught on. Microsoft owns most of patents for tablets and smartphones. The technology that all the smartphone manufactures use are licensed from Microsoft for a fee. There are cross licensing agreements with companies that includes Apple iOS iphone and Google "Android" that they license from part open source and Microsoft. Otherwise, you can not make a smartphone without patent litigation from Microsoft. ZTE has to pay for a license from Microsoft even if they only made Android smartphones. Microsoft wins no matter what Windows Phone 7 does or does not do in the smartphone space. They just want to be in the game when Windows Phone 8 comes out sometime next year. It will be interesting to see what the future holds for Microsoft going forward. Windows Phone 7.5 was a surprising improvement and merits consideration. Basically, there is no free lunch.

    February 05 2012 at 4:48 PM Report abuse rate up rate down Reply
    Mark Gibbs

    This is Stupid, 25 dollars for licensing fees is not dumb, this of what it cost to develop software and also legal fees. why do you think all the hardware companies are signing MS licensing fees for android because they cant spend the money on lawyers .. also Android might be free in googles eyes because they just hand the software out and its up to the htc's and zte's to change the software, drivers and so much more work to get the android 2.1 2.2 3.0 etc versions to work with the hardware.. wth MS most of this cost is done through MS.. and FREE ? look at the new motorola phones STARTing at 300 under contract .. what is cheap about that you need to give MS a break because you have no idea once a mobile OS is done and ready for manufactures what is involved. If google had eveything done than why dont they push the updates to all their phones ? because they can't because HTC and Samsung have modified it so much that its not google anymore.

    February 05 2012 at 2:31 PM Report abuse rate up rate down Reply