What does the handset maker get for that money? What it should get is sell-through. Microsoft becomes responsible for having sales of Windows Mobile in the channel.
Is Microsoft a Big Time Brand today? Ballmer thinks so. Matt doubts it. I doubt it, too, but I think the market can sort that out.
What is really at issue here, in the battle between Microsoft and Apple on the one hand and Google, Nokia, and open source on the other, is a basic view of how 21st century markets work.
Apple and Microsoft pull people into stores. Open source does not work that way. It lacks the money to invest in doing that.
While Microsoft starts its marketing embrace when you give it transaction permission -- when you buy from it -- Google and open source gain many other types of permission first, what you might call "free permission."
You will buy a Google Android phone because it has so much stuff on it that comes free. The user interface. The services. The applications.
You will buy a Windows Mobile phone because Microsoft convinced you to buy it. Just as with a Blackberry or an iPhone.
We will see which works best.