Earlier this summer we reported that the next two releases of Microsoft’s Windows Phone operating system are going to be called “Tango” and “Apollo”. Back then we didn’t exactly know what either of those versiosn would feature, but leaks have recently been floating around the internet about “Tango”. Mary-Jo Foley from All About Microsoft has said that her sources are telling her that “Tango” will be “all about Nokia” and that the goal of the release is to enable the creation of cheaper Windows Phone handsets. Nokia’s share of the smartphone market is dropping like a rock, and in Q2 of this year they lost their title as the king of smartphone makers to not one, but two companies: Apple and Samsung. The release of lower cost Windows Phones will no doubt fix that problem, because most people can’t afford the current crop of mid to high end Windows Phones that are on the market.
With all due respect to Mary-Jo, we think that her sources have it wrong. If Microsoft and Nokia are stupid enough to fragment Windows Phone to address a wider audience, then they’re going to poison whatever chance they have of the platform succeeding. Pricing issues have a way of correcting themselves over time. You can’t expect us to believe that Microsoft’s next version of Windows Phone will run poorly on one or two year old Qualcomm processors. By this holiday shopping season Windows Phone will have already turned one year old, and Nokia will have just barely brought a Windows Phone out to market. They should focus on the high to mid end and just take advantage of the natural fall in pricing of out dated technology to enter the low cost market.
If Apple has taught the industry a lesson it’s that portfolios are daft. Making more money per unit is much more advantageous than eking out decent margins, but making up for it with volume.