It’s no secret that Microsoft opened up its wallet for marquee apps. Todd Brix, a senior director at Microsoft, acknowledged in July that Microsoft was willing to pay app developers to write for Windows Phone 7. That was just one in a number of tools Microsoft employed to get big-name apps early and attract about 1,600 apps for the U.S. launch a week ago. In seeing the strong line-up of apps on day one — Facebook, Twitter, Yelp and others —  we’re able to get a sense of how far Microsoft went to bolster what probably would have been a light offering had it not committed serious cash and resources. It’s unclear how much Microsoft spent overall on its developer outreach efforts and how many developers were persuaded to do more or speed up development because of the incentives, but the efforts reflect how seriously Microsoft took the challenge and how critical developer support has become in the modern era of smartphones, especially for players like Microsoft which are trying desperately to catch up.

Luedorf said Microsoft approached Foursquare in August, expressing an interest in getting a Foursquare app on Windows Phone 7. Luedorf said Foursquare, which has about 35 employees, was unprepared to come out with a WP7 app, especially for a platform with no user base. So Microsoft offered to pay for the development of the app, which ended up taking about two months. (Nokia, by the way, also paid for Foursquare’s Symbian app, which has been downloaded more than 100,000 times.) Luedorf brought in UK-based app design firm Fjord, which built its Symbian app, to lead the development of the Windows Phone 7 app.

“Microsoft is a large partner with us and they’re putting a ton of emphasis behind Windows Phone 7,” Luedorf said. “It’s great to be part of that and reap the benefits of that early. There’s been a lot of press.”

One source familiar with Microsoft’s developer outreach said the company split its efforts into two teams: a depth team to reach the top 50 or so app makers, and a breadth team to evangelize to the broader developer community and offer them support. The depth team wasn’t shy about throwing around cash for “must have” apps, offering revenue guarantees or developers to build the app, said my source. He said Microsoft ended up building or funding most of the top apps on Windows Phone 7 including Facebook, Twitter, IMDb, Amazon and Yelp, though Microsoft didn’t consider it buying off developers.

“It’s not that we’re funding a team of developers to build apps,” said the source. “It was that without the apps the phone is incomplete; consumers will be handicapped if they don’t have a good Foursquare or Twitter app.”

PopCap, maker of Bejeweled and Plants vs. Zombies, was another high-profile developer that was approached by Microsoft. Microsoft also offered something in the neighborhood of $100,000 to bankroll a game from PopCap. PopCap declined the money, but still created a launch title called Bejeweled Live. Andrew Stein, PopCap’s director of mobile business development, said the company didn’t want to be tied into an agreement to build a game when its developers were still getting used to the developer tools. But in the end, the company still moved ahead because it saw the value in being there at the launch of Windows Phone 7.

“Whenever you talk subsidy or royalty guarantees, there are strings attached,” Stein said. “We weren’t sure we could meet the commitment but we already identified we wanted to be on there. If the platform succeeds, the dollars we were kicking around the table will be peanuts.”

Most of Microsoft’s work was done reaching out to developers at events and in some cases, cold-calling them. Ina Fried had a good story at Cnet looking at Microsoft’s efforts to appeal to developers. Slacker, an Internet radio app, was one of the developers who jumped at the chance to be on the platform early, in part because of its close relationship with T-Mobile, which promised to ship Slacker on its first Windows Phone 7 device, the HD7. Jonathan Sasse, SVP of marketing at Slacker, told me Microsoft was very helpful in providing support and also offered to promote the app on its app Market.

“I would say that the support we got from Microsoft was comparable to what we get from RIM, who we’ve worked closely with,” Sasse said. “For iPhone and Android, you develop with the tools they provide and the environment they set up, but there’s not a lot of communications that goes on.”

Time will tell if any of this pays off. As we’ve written before, most consumers base their purchase first on the hardware. The various OS makers know that apps are what keep many consumers tied to a platform and they’re very intent on competing for developer support. The fact that Microsoft had a deep lineup of WP7 apps at launch is not only attractive to consumers, but it’s also a strong sign to developers that the company is in it for the long haul, something many of the developers I talked to remarked on. That Microsoft or Nokia are opening up their wallets for apps and developers is just a sign they understand that developers are the new kingmakers.

Related content from GigaOM Pro (sub. req.):

• Why RIM’s Future (Unfortunately) Hinges on BlackBerry OS 6
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Post and thumbnail photos courtesy of Flickr user dslrninja.

Nearly half a billion dollars may sound like too huge a sum to throw at a smartphone platform, but this investment combination of advertising, increased brand awareness and a consistent message can reap vast rewards. Likewise, reliance upon word-of-mouth marketing has proven ineffective. Take the example of the $100 million marketing campaign by Verizon and Motorola on last year’s original Droid handset and the utter lack of marketing dollars for Google’s own Nexus One. As the first phone with Google’s new Android 2.0 features and improved user interface, the Droid benefited heavily from a massive media campaign. Yet the Nexus One, with hardware and software superior to that of the Droid, faced lackluster direct sales without marketing.  The marketing dollars helped make Droid become a top seller for Verizon and gave Motorola a needed boost, starting the handset-maker’s return to profitability, while Google ended up killing the Nexus One direct sales model.

Indeed, marketing may be the latest “feature” that Microsoft brings to Windows Phone 7. I’ve used the company’s mobile handset products since 2000, back when Windows Mobile was known as Pocket PC. In the decade since, I can count on one hand the number of times I saw a television spot or major media advertisement for the platform. Even worse: the branding focus for Microsoft-powered products was on the device manufacturer; I had a Compaq Aero, for example, not a Microsoft Pocket PC. The challenge is to market the Microsoft brand, because the average consumer doesn’t know or care what platform their phone is running. The company’s best bet is to leverage the branding of its ecosystem, which may be the most valuable, intangible asset Microsoft currently has: smartphone support for Office, Windows Live services and the Zune music store, for example.

Of course, marketing alone won’t turn a bad product into a hit, which is why I see the entire Windows Phone 7 effort as a jigsaw puzzle. With each piece added, Microsoft looks to finally bring a credible competitor to market. First was the difficult decision to start from scratch and add an an innovative user interface instead of borrowing from the boring, old Windows Mobile platform. Next was the Apple-like control around standard hardware, a centralized app store, and a framework for items like multitasking and notifications. Smartly leveraging the Xbox Live brand with handheld gaming is another piece in the right position. Solid developer support from Microsoft has always been a strong point and the company is already witnessing developer interest in Windows Phone 7. If the hardware and software pieces are all in the right places, the only major missing item for potential success is now marketing dollars, provided that Microsoft and its partners build a compelling ad campaign.

Why invest half a billion, a billion or more dollars? Consider that for all of the recent buzz around the smartphone market, there’s still far more growth potential to come. There are roughly 4.6  billion handsets currently in use around the world, but only a scant 61 million of them sold in second quarter of this year were smartphones, according to Gartner. Microsoft knows that it must invest now — both in product development and advertising of such products — in order to reap benefits of the growing mobile market. Revenue from the desktop is still huge for Microsoft, but the brighter future is in mobile, and that’s well worth a billion dollars today. Microsoft’s Windows Phone 7 still has to deliver in terms of features and functions — no amount of marketing money changes that — but at least the company will advertise the platform to give it a chance at success.

Related research on GigaOM Pro (sub. req’d):
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