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@ MWC: We Learned Just How Great Of A Partner HTC Is To Microsoft

imageAt Microsoft’s press conference yesterday at Mobile World Congress, if you tied two threads together, you learned a very interesting fact about HTC, one of the company’s closest handset makers — the Taiwanese company is responsible for 80 percent of Windows Mobile phone sales. The number is astonishingly high when you consider the next fact: Microsoft (NSDQ: MSFT) has 50 handset partners.

First, Andy Lees, SVP of Microsoft’s Mobile Communications Business, said the company has sold more than 50 million Windows Mobile devices over its lifetime. Then, HTC’s CEO Peter Chou came on stage and reminisced that his company has sold more than 40 million HTC Windows Mobile devices around the world. Chou: “12 years ago when we started our company, we met with Microsoft early on. It was clear that we shared the same vision of smart connectivity. I’m an old veteran of Windows Mobile. We try really hard to make all the visions happen, and we have sold more than 40 million HTC Windows mobile phones around the world.”

The next conclusion to make is that the other 49 OEM partners, including Palm (NSDQ: PALM), Motorola (NYSE: MOT) and Samsung, have sold a 10 million phones all combined.

Full coverage at our Mobile World Congress channel

12 Responses to “@ MWC: We Learned Just How Great Of A Partner HTC Is To Microsoft”

  1. 1) the 80% HTC on windows mobile is NOT news. It has been reported and consistent for two years through the phenominal growth of WM
    From 2006: HTC making 80% of Windows mobile

    Right now windows mobile is 2.5x bigger than iphone and selling faster than iphone by a very good rate, in fact increasing in market share. Windows mobile sales are increasing while iphone sales seem to be plateauing according to apple statements about 09 so far .

    The third largest phone maker in the world, LG, which sells about 20x times as many handsets a day as iphone has just singed last week an exclusive with Microsoft for WM on all its upcoming smartphones.

    2) @ melgross "and Palm has its own manufacturing partners. "
    Palm has had wm devices made by HTC in the past and its latest, Treo Pro is made by HTC exclusively . HTV has made millions and millions of Palms and is will be the biggest current Palm ODM for Palm for 2009-10.

    3) KDT: "Microsoft makes about $8.00 per WinMo device. Microsoft would have to sell 300 Million licenses for WinMo to equal the revenue of 6.9 Million iPhones. Even when you consider net profit. Apple is reported to make about $250 – $300 per phone sold once you count carrier subsidies. "

    Really not analogous and not analogous use of numbers. First Iphone involves both hardware which involves huge rd investment and risk on the hardware alone as well as software. Second those iphone $250 profit estimates for both software AND hardware are not really net. They are ballparks by outsiders that take no R&D for either software or hardware, zero costs of apples retail stores, and zero costs of adverting. windows mobile devices are 90% advertised by carriers, and iPhone adverting and marketing is born almost totally by Apple. Appel even has to license certain software from Microsoft on each and EVERY iPhone! Real relative profit on the two OS is probably close to equal.

  2. @Surur: My apologies. I misstated the following:

    "And while most analysts agree they will further sell another 40-50 million iPhones in calendar 2009"

    Should have read:

    "And while most analysts agree they will further sell another 30-odd million this year to reach 40-50 million iPhones in calendar 2009."

    Not sure what happened to my brain there; but, yes, I expect Apple to reach at least 40 million by year's end, even with the economy; it is not impossible for that to reach the 50 million mark and beyond by early-mid 1010. The key there is the China market, which is yet again delayed. Had they launched in China last Fall as hoped, they would have easily topped 30 million by now.

    IMHO, anyway.

    And, yes, I missed that Q4 WinMo sales figure of over 6 million (citation please?). Ballmer said they sold 20 million in all of 2008; most of those were sold in the first 3/4 of the year, by their own SEC filings. Apple sold 7 million and 6 million, in Q4 and Q1 (2nd half 2008), respectively. On average, that still outstrips MS.

    I think you're thinking of RIM, which outsold iPhone by about a million after the Storm lauch. And, no, of course RIM is not shutting down (yet); like Apple, and unlike MS, they not only make and sell the whole widget, they have a lovely profit machine in their email subscriber base. If they can get past the Storm disaster, they will be viable and competitive, to say the least, for years to come. Again, competition is good for everyone.


  3. You guys are pretty deluded.

    Apple to sell 50 million iPhones this year? So this quarter they will sell 10 million? More than double what they managed over the holiday season last year?

    I guess you did not get the memo where Windows Mobile outsold the iphone in Q4 2008. Probably not.

    And btw, is RIM also shutting down, because at 50 million sales thats just about the same as RIM sold over about the same period.

    BTW – cut and paste. haha

  4. WinMo is not that profitable for MS…..

    Microsoft makes about $8.00 per WinMo device. Microsoft would have to sell 300 Million licenses for WinMo to equal the revenue of 6.9 Million iPhones. Even when you consider net profit. Apple is reported to make about $250 – $300 per phone sold once you count carrier subsidies.

    Even on the lowend. Microsoft would have to sell 40 licenses just to equal the profit of one iPhone.

  5. Umm, Ham — may I call you Ham? — I'm definitely sold on the iPhone koolaid, but in the interest of accuracy and fair play, per Apple's own quarterly reports last month, to date, they have sold just 17 million iphones as of 29 January 2009. And while most analysts agree they will further sell another 40-50 million iPhones in calendar 2009, it is doubtful that in under a month they have already sold the additional 23 million required to have overtaken lifetime sales of MS WinMobile.

    Still, the point is well taken that in just under two years, Apple has sold nearly 40% of what has taken MS more than a decade — moreover, that MS has repeatedly missed its own sales estimates (let alone targets) for WM, and doesn't stand a chance of equalling iPhone sales for at least this year, thus giving Apple an almost guarantee of outselling WM's lifetime sales by sometime in 2010. This, of course, assumes the global economic meltdown does not continue to abate sales overall; that the trend of people replacing old cellphones with smart phones continues, etc.

    Personally, I can't imagine that MS is really profitable with WinMobile, and, were it not MS, I would have expected t to fold by now. But their massive cash cow from Windows (for PC) and Office products allows them to stay in what Apple would see (relatively) as only a hobby market. Pride alone will keep Ballmer in this game; he has badmouthed Apple an iPhone too much and too often to concede any victory this early.

    And competition is good for everyone, so, God Bless MS for trying to stay in a game where they are so hopelessly behind, in both sales and technological evolution. WiMob 6.5 is laughable, considering it is yet to be due, and Apple will likely have released a third generation OS and iPhone before 6.5 even ships.

    The real star to watch is the return of Palm. WebOS looks EXTREMELY cool, and looks to have several advantages over iPhone — though iPhone arguably has several more in return. Apple will be hard-pressed not to steal/copy/leverage some examples Palm has laid forth, just as Palm has clearly taken from Apple's lead. I just hate that the inevitable course is that the two will both wind up in court trying to defend against the other, burning up company profits and reducing shareholder value and potential R&D monies.



  6. 'Apple's platform will grow stronger and maintain huge advantages over competitors as long as there continues to be one iPhone OS version for all handsets from all carriers. Apple did something quite extraordinary with the original iPhone that it launched in June 2007: It broke carriers' control over mobile operating system updates. Rather than there being multiple mobile OS versions, further fragmented by carrier distribution, Apple controls and distributes the updates."

    Apple is on target to surpass WinMo… it has no chance going forth.

  7. Windows Mobile is not that great. We are on target to sell 55Million phones before we ditch it for Windows Mobile 8 1/2 … it will be great. It may even get an Academy Award for Best Bad Actor in a drama.

  8. @Hamranhansenhansen:
    I think Microsoft likes the very high profit margins on software compared to hardware. For example, despite its relatively high mindshare, Xbox isn't a great profit-maker for Microsoft. At the time the precursor to Windows mobile was decided, the financial situation of Apple wasn't a great argument for vertical integration (it wasn't an argument either way, really, but that didn't matter at the time) and the explosive success of Win32 variants seemed like it would have an encore on mobile platforms.

    Now, I suspect Microsoft is really hampered by its mobile OS history. Windows mobile is poorly designed in general, but in particular it has been incrementally grown from a platform intended for much weaker architectures than current smartphones, which makes an originally poor design so much worse today. They might be technologically better off starting from the to-be-Windows-7 sources, but I'm sure that's got some baggage too, and it would alienate various partners (though that might be less of an issue as they flock to alternatives).

    (I don't think Apple has hit the 40-million-iPhones mark yet. They've done impressively well, but not _that_ well…)

  9. Hamranhansenhansen

    Why doesn't Microsoft just buy HTC and make Windows-branded phones? Or Zune-branded phones? Or Xbox-branded phones? Isn't it a lot of work to try and make Windows Mobile hardware-agnostic and then it ends up running on HTC 80% of the time anyway?

    I think Microsoft's old school idea about hardware and software being entirely separate is way, way out of date. The Web browser and the touch screen create "hardware buttons" on-the-fly out of software. In a sense, modern hardware is done half in hardware and half in software. The hardware company has to have half hardware engineers and half software engineers, all working on making hardware.

    The 40 million phones that Microsoft+HTC have created over the last decade (which is less than the iPhones Apple sold in the past 2 years) would have been much better if one hand had known what the other was doing.

  10. Actually, raleigh, most of those companies make their own phones. HTC does not do OEM work for Motorola, and Palm has its own manufacturing partners. Samsung also manufacturers their own phones.

    You could find this out easily, if you looked.

  11. >>> …The next conclusion to make is that the other 49 OEM partners, including
    >>> Palm, Motorola and Samsung, have sold a 10 million phones all combined.

    Well…HTC is an ODM for…ALL of those guys? (Certainly Palm). So what "they" sell is what HTC sells…might cause a little double counting to say the 40 million HTC sales AREN'T included in whatever, say, Palm sells.