Are Mobile Devices Microsoft’s New Billion Dollar Business?

Microsoft has been struggling to get marketshare in mobile devices. Android and iOS based phone/tablets are crushing Windows. Then there is the consistent Microsoft stock price and revenues. Microsoft’s Entertainment and Devices Division (EDD) posted staggering results courtesy the Xbox 360 and Kinect (2011 fiscal reports). SeattlePi’s Nick Eaton observed that the rest of EDD revenue is approximately $600 Million. This number includes sales from Zune, Surface, Mediaroom and hardware.

Yesterday, before Amazon joined the cool consumer tech companies, the top news was Samsung and Microsoft signing a patent deal for Samsung’s Android devices. Goldman Sachs estimates that Microsoft is set to make $444 Million from the various Android patent deals with several OEMs.  Now, realizing that Windows Phone isn’t the one making $600 Million but making a considerable contribution to the number and $444 Million from Android devices, Microsoft’s investments in mobile devices are bringing them close to a Billion Dollars.

Steve Ballmer did say that Microsoft hasn’t been able to sell as many Windows Phone devices as they hoped to. However, Microsoft’s strategic partnership with Nokia is yet to come to market. Nokia CEO Steven Elop showed Sea-Ray which will be their WP7 device, is expected to launch this holiday season. During the deal with Nokia, cheaper Windows Phone handsets were being talked about. This led to doubts around fragmentation and how apps will function on lower specs. As it turn out, Microsoft’s tier II chasis specs can run existing apps. WMPowerUser points out, the compromise is on camera and storage. (Microsoft shared the official specs as ZTE’s Tania was launched.)

HTC recently launched their Windows Phone Mango handsets—HTC Radar and Titan. The company  says Windows Phone constitutes to 30% of their handsets which is a considerable share.

MG Siegler puts it quite right, the strategy is genius for Microsoft. As partners pay Microsoft for something Google says is free, they might as well pay Microsoft for their platform which is nothing short of Google’s Android and in many cases is better. (Zune Marketplace for content and a coherent update roll out process.)

PS:  Asymco estimates Windows Phone 7 current revenues to be $30 Million (2 Million licenses at $15/license).

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Manan Kakkar

Manan is a technology enthusiast keenly following the consumer products from Microsoft, Google & Apple.