News

Microsoft Reportedly Eliminates Windows Phone Fee for Some OEMs

• By Gladys Rama
• March 13, 2014

Two of Microsoft's newest mobile hardware partners will be able to manufacture Windows Phone 8 devices at no cost.

Microsoft is waiving the Windows Phone license fees for India-based original equipment manufacturers (OEMs) Lava and Karbonn, according to a report by The Times of India on Thursday, citing multiple unnamed sources familiar with the matter. Windows Phone devices from the two OEMs are expected to roll out over the coming months, the report said.

Lava and Karbonn, both of which also manufacture Android-based smartphones, were among nine new Windows Phone partners Microsoft announced at last month's Mobile World Congress event.

Executives from the two OEMs reportedly agreed to manufacture low-cost Windows Phone devices only after Microsoft waived the licensing fees. The Times called the deal "unprecedented," noting that even Nokia -- which Microsoft is in the process of acquiring, and which currently accounts for 90 percent of all Windows Phone devices shipped -- pays a license fee for Windows Phone.

The move marks another effort on Microsoft's part to boost its persistently low smartphone share, particularly in markets like India, where Android remains the overwhelming leader. Smartphone adoption in India is among the fastest in the world; in the fourth quarter of 2013, smartphone shipments in the country ballooned by 181 percent year-over year, according to IDC, which put Lava's and Karbonn's market shares at 5 percent and 10 percent, respectively.

"[Microsoft] is obviously exploring new models for Windows Phone. It must have realized that the older model where it licensed the OS did not work out well, even with Nokia's support," the Times quoted a senior phone executive in India as saying.

Microsoft reportedly pursued a similar deal with HTC. According to a Bloomberg report in October, Microsoft asked the Taiwan-based manufacturer to create dual-boot Android-Windows Phone devices, with Microsoft offering to either cut or eliminate Windows Phone's license fee as part of the deal. The talks were said to be in the preliminary stages at the time.

Recent reports indicate that Microsoft is seriously considering the dual-boot option with other smartphone partners, including Karbonn, which is preparing to launch a dual-boot Android-Windows Phone device in mid-2014. Huawei apparently is also set to debut a dual-boot phone sometime in Q2. Nokia recently launched its Nokia X line of Android devices that use some Microsoft services, including OneDrive and Skype, as well as resemble Windows Phone devices both in UI and hardware.