Microsoft to put its Windows Phone marketing dollars where its mouth is

By | January 4, 2012, 8:00am PST

Summary: Microsoft and its phone partners seem finally ready to put some real dollars (in the hundreds of millions) behind launching new Windows Phones in the U.S. in 2012.

It’s time — actually way past time — for Microsoft to start investing some real money behind Windows Phone marketing.

On January 4, reports of exactly how much Microsoft may be ready to spend on marketing the Nokia ACE (a k a, the Lumia 900) in the U.S. began circulating. I’m going to go with my Windows Weekly cohost Paul Thurrott on this one, as he is citing internal Microsoft documentation as his source. He’s saying the amount that Microsoft, Nokia and various phone partners are ponying up to spend in the first part of 2012 to push Windows Phone is close to $200 million.

The most interesting part of Thurrott’s post (to me, anyway) is about sales incentives.

As many of us “early adopters” of Windows Phone found out the hard way when we went to buy them, many retail sales reps haven’t been all that keen on selling Windows Phone, preferring to steer customers to iPhones and Android phones. A big part of the reason for that: They get commissions and gifts for doing so.

Microsoft is finally ready to do the same, it seems. From Thurrott’s post:

“Included in the (Microsoft/Nokia marketing plan) plan are sales incentives for retail workers aimed at getting them to finally start recommending Windows Phone as an alternative to Android and the iPhone. The amount of payments are $10 to $15 per handset sold, depending on the number sold, for some handset models.”

I have heard from my contacts similar numbers, along with promises of free Xboxes, car steroes, free pizza Fridays and other sales “incentives” thrown in for good measure.

I am stymied as to why it took Microsoft this long to figure out that these kinds of promos and paybacks are what’s required in the phone business. Why not just take some of those Android patent royalty fees the company is busy collecting (rumored to be anywhere from $5 to $15 per handset) and use them to grease a few palms?

The Nokia Lumia 900 (ACE) is expected to launch on AT&T in mid-March. The Nokia Lumia 710 (codenamed Sword), is going to be available on T-Mobile starting January 11, and is expected to be on Verizon by mid-April.

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Mary Jo has covered the tech industry for more than 25 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

Disclosure

Mary-Jo Foley

Freelance journalist/blogger Mary Jo Foley has nothing to disclose. WYSIWYG (what you see is what you get). I do not own Microsoft stock or stock in any of its partners or competitors. I have no business ventures that are sponsored by/funded by Microsoft or any of its partners or competitors.

Biography

Mary-Jo Foley

Mary Jo Foley has covered the tech industry for 25 years for a variety of publications, including ZDNet, eWeek and Baseline. She has kept close tabs on Microsoft strategy, products and technologies for the past 10 years. In the late 1990s, she penned the award-winning "At The Evil Empire" column for ZDNet, and more recently the Microsoft Watch blog for Ziff Davis.

Got a tip? Send her an email with your rants, rumors, tips and tattles. Confidentiality guaranteed.

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RE: Microsoft to put its Windows Phone marketing dollars where its mouth is
hermanwalton 12th Jan
@smashandgrab There is absolutely NOTHING cool about having an iPhone. Just a bunch of nerds trying to redefine cool to make up for their statuses of loser in real life.
1 Vote
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The 10 year long DOJ restraining order on Microsoft ended and was lifted this last summer. Now Gates the world's #1 high-tech shark who still advises Microsoft can go full out in competing with Google and Apple unrestricted by the DOJ restraining order.

Rumor is that Nokia may be coming out with a Windows 8 tablet in the U.S. It wouldn't surprise me. The Windows 8 Cloud based ecosystem is being built as you read this. The W8 ecosystem will seamlessly connect all devices running W8 from destops to tablets to smartphones etc through the Metro based applications and the Cloud.

The shark has been let out his cage and he coming for Google and Apple. i worked in the computer industry in the 80s and 90s and was very familiar with the methods that Gates and Microsoft employed to crush their competition. While it will not be that easy this time around I wouldn't bet against Microsoft making significant in roads into areas now dominated especially by Google and Apple.
@Nesivos Its about time. But Windows Phone is so good it just needs a little push to get the ball rolling.
Funny how they had the balls to sue MSFT back then. It's like you sue Michael Jordan for completely dominating you in the basketball yard. The weirdest part was that they actually won thanks to our sad & bizarre anti-business legal system.
  • Flagged
0 Votes
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Sad and bizarre?
x I'm tc 4th Jan
@LBiege
It is a darned good thing they did, too. There would be no Apple nor Google today if MS hadn't been under antitrust restraints. Those "bugs" would have been squashed long ago. Now that there are two not-so-easily-brushed-aside competitors "in their space" we, the users, will benefit. Note that even if you are firmly in the MS camp, the fact that they are being forced to compete will mean you, too, will get to use better products.

The quality of Bing, IE9, Windows Phone, Azure, and yes, the excellent Windows 7 (and hopefully 8) is a direct result of the antitrust actions taken against MS. Enjoy.

I don't find that sad nor bizarre at all.
Awesome news. I would like to see more WP7 phones on Verizon's network instead of just the one (or 2 this April). Microsoft needs to get Verizon more involved since they have the majority of coverage in the U.S. I'm considering switching to AT&T just because of their line up of WP7 phones.
1 Vote
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Left Verizon for ATT for HTC Titan
jhevener@... 4th Jan
@Loverock Davidson-
I wanted a serious Windows Phone. It is clear that Verizon is putting most if not all of its efforts behind DROID. iPhone sells itself - the sheeple buy those things. I still have four lines with Verizon, but switched my primary to ATT for the HTC Titan - and it is awesome! Combined with Office 365 - just feel the power!
@Loverock Davidson-

This is where I am at, 10 year verizon customer but if they don't offer more Windows phones I will switch to ATT. When I checked out the most recent Windows phone on ATT, I was quite impressed. I get the same corporate discount on ATT as I get on Verizon so it won't cost me to change once my Verizon contract expires. ARE YOU LISTENING VERIZON?!
Mary Jo, i've also been curious why Microsoft simply wasn't taking a percentage of the Android licensing dollars and putting that into a massive marketing and incentive campaign. Just seems like a no brainer to me.

The free gifts will go over huge too.
Windows Phone is great and with Windows 8 and its Metro UI on the horizon the future is so bright I gottta wear shades happy
Mary Jo, this is the first time I have seen it said that sales people sell a lot of Androids and Iphones because " They get commissions and gifts for doing so."

Where has that story been buried all this time? I read blogs obsessively and have never heard that claimed. Seems to me that that is huge reason why WinPho is behind.
@JimmyFal

'Spiffs' have been around for decades(late 1800s?). Retail sales aren't steered merely by individuals salesman's bias but often by which items generates the most in spiff.
@JimmyFal - Yes. I am confused too. Usually Microsoft is much faster when copying folks. They really dropped the ball on this one!
@JimmyFal
If you had read the link information the incentive was payment of $10 to $15 per Windows Phone handset sold. Reading too many blogs I guess.

So the only way to get sales staff to recommend the Windows phone is to pay them?
@daikon

And had you read the article you would have read that "preferring to steer customers to iPhones and Android phones. A big part of the reason for that: They get commissions and gifts for doing so."
@whatagenda
The most interesting part of Thurrott???s post (to me, anyway) is about sales incentives.

Note: (to me, anyway) Thats MJs opinion.
Nothing in Thurrotts post says they get commissions and gifts for doing so.
@daikon

I didn't attribute that quote to Thurrott. I understood MJ was saying the interesting thing(to her) about Thurrott's post was that MS was finally giving incentives.
That said, all manner of consumer products carry spiffs and/or varying commission rates set by managemnet. This practice is prevelent in a broad swath of industries, e.g. the beer and wine distribution business.
Ever wonder why you get pushed so hard to buy the add-ons at so many retail outlets? It isn't always the margin for the store. It is often the 'margin' for the salesman.
The independent phone shops (non-carrier stores) are often organized around purely a spiff system. A search of the web will show you many a whine about how the OEMs and carriers are abusing the independents by narrowing the spiffs to the point they can't make money.
An example of how prevent a practice spiffs are; there are "incentive" management firms that specialize in 'managing' spiffs for companies who wish to use spiffs to incentivize their sales partners.
"I am stymied as to why it took Microsoft this long to figure out that these kinds of promos and paybacks are what???s required in the phone business."

The explanation is simple. Ballmer is a MORON. Microsoft should have fired him ages ago. His vision since he's taken over has been, "release the next versions of windows, sql, and office, and repeat." A lump of feces could do a better job.
@jackbond
+10
@The Danger and @jackbond you guys are clearly about 4 years behind what has been happening over in Redmond. Why not go hang out somewhere your outdated and tired old copy arguments can be believed by clueless masses.
@jackbond
just curious, that's all.
@William Farrel
Having nothing better to say about Ballmer, MS fans are now left comparing him to random posters on zdnet.
@William Farrel

By that logic, anyone running a company must be doing a better job than someone who isn't running a company would. Are you that brain dead? And am I alone in criticizing his management? Not at all. Get a life.
@William Farrel Even a non-CEO can see that under Ballmer's guidance, MSFT seems to have largely been coasting on its past successes. Far be it from me to judge the board of directors for being largely satisfied about that, but their stock has been stagnant at best, and much of that has to do with the aforementioned coasting (or at least the perception of said coasting).

The cancellation of the Courier did seem to show a rather interesting problem with Microsoft's long-term plans: they seem to have everything riding on Windows and Office. This certainly seems to be a sound strategy in the short term, but they haven't really taken very many risks or made any attempts to expand beyond Windows and Office (arguably, the fact that Windows Phone 7--as good an OS as it seems to be--is still called Windows Phone 7 is a reflection of this).

Don't get me wrong: I'm not predicting anything particularly dire for Microsoft, but their current strategy is only ideal if they're content with coasting on past victories. Even the New York Yankees have to win new championships every once in a while.
@Third of Five I'm by no means a marketing expert but hard to tell if Windows brand is an asset or a millstone in the consumer space. In the business space "Windows" has brand value (both positive and negative) that they've been able to extend to "Windows" server and to some extent to Windows Phone (at least perception with last gen 6.X line and may influence some corps with WP7 if they can demonstrate enterprise value add - security, integration, dev model, mgmt, licensing, private app cloud, etc.) Not sure this translates into consumer space. But you're right - like the Yankees they need to win a few championships every decade to maintain the brand value / premium.

Interesting to see Apple doing similar with their "i" brand qualifier (iMac, iPod, iPhone, iPad, etc) although primary brand continues to be Apple. I'd posit that their hugely successful iPod/iPhone product lines in many ways saved or materially enhanced the success of the iMac line. Certainly are recognized as a very valuable consumer brand but wonder what happens if they every launch an iVista? Less likely as they control the whole ecosystem but sometimes hard to control the message/perception (good deal of Vista failure was perception driven by msft message vacuum, OEM confusion around Ready/etc., media, competitors, etc. - certainly some tech challenges but Vista itself really didn't cause cancer in lab rats. Took a bunch of tech bullets that W7 would have suffered otherwise. Definitely major messaging fail though.)
@Wolf_Lodge I know Apple did release some stinkers in the pre-OSX days (System 7 was widely panned--well, widely for Apple, anyway). Their having an arguably smaller market share probably lets them be more agile than Microsoft can be.

I don't think it's necessarily Windows itself that is both asset and liability, but the fact that Windows' virtual ubiquity makes it difficult to make any sort of significant change with it. Look at what happened with Vista--the guidelines for how programs were supposed to be written in Vista were announced in about 2001, but a lot of programs were broken because companies still stuck to the old ways of doing things. Plus, over a billion people use Windows, so anything Microsoft does affects those billion-or-so people. Heck, I remember reading what MS did for Win95--people bought every software product in a store and tested how it would work on Windows 95, and how to make Windows 95 work with it. (Of course, there are a lot of programs that don't behave as they should, and making them behave--or at least minimizing the damage their bad behavior can do--is a convoluted task).
0 Votes
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Will MS be looking to use the basic Windows 8 kernel with the Windows Phone? If so, what would this mean to WP7 as a platform? Does it have the same kernel?
@OrlandoHatch
The rumor going about is that this will happen and it's quite the recurrent rumor (you know what they say about those).
As for what it would mean for the platform if it does happen, the answer is 'nothing' and 'more'. Nothing in the sense that it would not drastically affect the wp app platform or user experience, in order words all presents apps in marketplace would still work since they're all silverlight, wp metro user interface will still look and function the same and most importantly all phones should be able to get the update just like they do now.
The 'more' aspect however is most beneficial to Microsoft, Developers and OEMs, it won't really affect end-users directly. For microsoft, it provides them a single core OS code base to manage across their 3 screens (PC, TV(Xbox) & Phone) which you would agree is alot better and cheaper than having two to cater for. It would also allow them to rapidly evolve their ecosystem easily.
For developers, it makes building apps for the microsoft ecosystem much more consistent and highly portable. That means you could (in theory) build an app for the xbox and make little to no effort to port it over to the phone or PC or both (the little effort made would probably just be in tweaking the UI since different user environments are being targeted).
For OEMs it brings them a more matured OS kernel with a huge catalog of device drivers both for phones and PCs (especially now that windows runs on ARM and some of these OEMs will be making both the phones and PCs).

The only scenario I can see the end-user benefiting most for now is when they are heavily invested in the Microsoft ecosystem. In such a case the user will not only see consistency in the look and feel of his/her phone, PC & xbox but will also find all systems to function as a collective whole whether it's in app synergy or system synergy.
hard to grease palms without enough phone hardware for an OS in it's infancy). Even today a 14 month old mid-range WP7 on Verizon (HTC Trophy) is not able to grease palms. Even Nov 1 AT&T had nice but not "state of the art" phones prior to Mango devices released a week later. Newer and new LTE devices (Titan, Focus S, Nokia, Focus Flash, Nokia & other LTE models) at all pricepoints can finally allow this to happen.

In addition almost every major "app" is almost now represented along with many xbox live games, etc.
Sorry guys, but I have not seen a windows powered phone yet that was worth a darn. MS is dropping CE for Mobile and TBH - Mobile at this time (just like before) stinks to high heaven. I would rather buy an iAnything product than a Windows powered phone and I can't stand Apple because of the cost associated with being a "Cool Kid".
@smashandgrab, Don't be sorry. It's obvious you think this is still about Windows CE and Windows Mobile.
@smashandgrab - Yeah, and I guess you are staying away from Windows 7 because that horrid DOS 3.3 was a piece of junk. Sorry, don't expect to be taken seriously when you post drivel.
@smashandgrab There is absolutely NOTHING cool about having an iPhone. Just a bunch of nerds trying to redefine cool to make up for their statuses of loser in real life.
Even if Microsoft were to double their sales, it would still be a drop in the bucket. Sadly, Microsoft is fighting for a market that doesn't exist. There is no phone operating system market, only a hardware and services business. If I were a hardware company, I'd be asking Microsoft for money to put their operating system on our phones, plus a cut of all app sales! Really, how much could MS charge for a phone OS?
@jc4691

"There is no phone operating system market, only a hardware and services business. "

MS is all ready a big part of the Phone OS market, they get paid for every phone that has Android on it.
and is expected to be on Verizon by mid-April.

Seriously? Well I had been waiting to hear about when a new WP7 device would come out for Verizon. I wanted to at least see something to compare before I get locked into a new contract, but I'm not going to wait 'til April. If I don't see anything new before then, then I guess it'll be the iPhone.
@Badgered

That may not be entirely Microsoft's fault. Verizon is "reluctant" to do anything that isn't Google/Android related.
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Incentives?
daysleeper26 4th Jan
Do we know for a fact there are incentives for selling Android and iPhone?

And if so who pays them? Is it the carriers because they make more on Android devices? Is it the device manufacturers because they control more of the (often awful) experience?

I've always gone along with the common assumption that there must be some incentive to sell Android, but I just wonder if there is any evidence?

The last thing us Windows Phone fans want is for the headlines to read "Microsoft bribing carriers to sell you a phone you didn't want"
@daysleeper26
The incentive was payment of $10 to $15 per Windows Phone handset sold for the retailer.
@daysleeper26 Exactly this! There are no official comments from Google, or Apple for that matter, that they are 'incentiving' the carriers personnel, so it is all just speculation that they are getting incentives since they push these two OSes so much. But the truth is probably moreso around the fact that the sales people simply like Android/iOS more and would gladly recommend it. It really is no different than someone with a WP device, who loves it, would gladly recommend it to a friend, family member, or a stranger.

There is nothing wrong with offering incentives, but the incentives should come from the carrier; neither Google, Apple, or Microsoft should have to pay incentives to AT&T's (or Verizon's) staff. And you're right, if WP sales go through the roof, it will be somewhat embarassing because Microsoft, in effect, DID have to pay someone to use a device with WP.

Hopefully, the incentives, if they are truly going to be paid out by Microsoft, will be for a limited time only. WP and Nokia deserve to see if these devices can sell themselves based on their own merits (OS/Hardware).
@1019902735 ... really? I feel like Apple, Google, and Microsoft *should* be offering incentives for their offerings to the carriers, and the carriers should be passing those on to the retailers. It's a win across the board that way. If they're getting rewarded regardless of platform, they'll be inclined to really push the solutions a customer can actually benefit from.
@1019902735 If they are going to offer incentives I'd rather see them offer store employees a free phone. That will get them to really use the device and probably/hopefully like the device.

I genuinely believe most of these store staff will never have touched a Windows Phone, how can you expect them to sell them, or want to sell them?
@1019902735
It is my understanding that the 30% that Apple charges for Apps, in the Google World, these 30% goes to the operators as incentive. This helped with the start of of Android.
@daysleeper26 First - assume all wireless sales reps are incented to sell most anything they offer - devices, accessories, plans, upgrades, etc. Any salary survey shows clearly that most rep's commissions equal or exceed their base salary.

Second - Question of who pays, amounts, effect on sales rep behavior are very fluid and often complex. One month may have iPhone push, next Android with data / LTE premiun bundle, next may be little commission first 10 units but 11-20 very incented. Who cares if msft/apple/google, Verizon / AT&T / Sprint, or ODM (HTC, Samsung, etc) incents the sale with $s or swag? They all do at multiple levels throughout the channel and at some point the retail sales rep understands what they need to do to optimize their comp. That's primarily a business model decision. Often incentives are also passed thru to consumers in discounts, accessory add-ons, carrier switching discounts, early renewal contracts, etc. Would rep steer an undecided smartphone walk-in toward WP over iPhone or Android - depends on incentives including probability of closing the deal and effort / time involved. If I know / like Android, have more handset choices, and incentive is similar or better then iPhone / WP7 I'd likely push that as I can sound more informed with higher likelihood of closing, less time expended, lower return percentage, and higher potential cust sat - if measured.

Do wonder how many customers walk in without a preference in this day and age. Most early adopters would likely have strong opinions, middle late would likely be open but leaning towards 'most popular' , safe, seen being used by tech savvy friends, or looking for best overall price.
Msft has already spent 500m on the WP7 launch in 2010 which is equal to Apple's ENTIRE 2009 marketing budget (for iPhones, macs, apple stores, Software, iTunes, etc).

http://techcrunch.com/2010/08/26/microsoft-half-billion-dollars-windows-phone-7/


http://tech.fortune.cnn.com/2009/10/28/apples-2009-ad-budget-half-a-billion/



Contrary to popular legend, msft outspends Apple by a huge amount in advertising and marketing.

Also how much are they charging for licenses?
Msft use to only make $8 to 15 per win mo license... (so where's the profits?)
0 Votes
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Commissions: a no brainer
NeilNuttall 4th Jan
Way back in 2010 when Windows Phone was first (re?)launched, I had assumed that was exactly the tactic Microsoft would take. Pull out all the guns to get WP into the hands of as many customers as possible, get a reasonable market share (for a new entrant), build up to a critical mass, then sit back and watch the units sell themselves. Customers, after all, are the best salespeople, and word-of-mouth is the best advertising.

Livin' in the land downunder, I like many others, are watching what's happing in Europe and the US with the Nokia Lumia and other gen2 handsets with eager anticipation. Neither OEMs nor Microsoft have announced any gen2 handsets for the Australian market (despite MS insiders telling me in Nov that there would be 2 Samsung devices by EOY 2011). If one visits windowsphone.com.au it lists 4 gen1 handsets from 2 carriers (used to be 5 from 3), but if you contact either of those carriers you'd be doing well to be able to actually get one (most of the links to the carriers from windowsphone.com.au lead to dead-ends). Our only hope is that nokia.com.au is at least listing both the Lumia 800 & 710, but with no release date information (although again, an MS insider told me very early 2012). If my office is anything to go by, by way of user stats, iPhone has around 90%, Android 9.5%, Windows Phone 0.5%. I am hoping that a similar war-chest is opened up down here too (and soon, my iPhone is out-of-contract and I really want to give it the flick)

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