Does $500 Million Mean Windows Phone 7 Will Flop?

Spending lots of cash on a tech product launch isn’t necessarily a sign of desperation, but it helps

Microsoft is reportedly spending $500 million to launch its Windows Phone 7, and maybe the product needs it. But does that mean it will be a flop or success? For Microsoft, the price tag doesn't seem to make a difference.

Unlike Apple or Google, whose finessed manipulation of the media saves them millions in advertising, Microsoft is used to shelling out coin to make an impact--good or bad.

Let's take a look at some recent launches and how they have fared.

The Kin: This smartphone aimed at tweens, teens, and young adults seemed to have stopped before it really began. Executed at only seven weeks old earlier this year, the Kin reportedly cost Microsoft $1 billion over three years. However, Microsoft refused to release the cost of its launch.

Office 2010: Microsoft spent $80 million to launch its latest version of Office this year, using mostly online advertising. However, sales were reportedly lagging a month after the launch, with many critics saying it was due to the availability of so many free online tools.

Instead of using its average launch targeting business customers, Microsoft seemed to target consumers, which may have been part of its problem. Its anemic advertising budget may also have played a part in its lack of success.

Windows Vista: Microsoft spent around $500 million to launch the new operating system in 2007 with company hypeman, Steve Ballmer calling Vista "the best release we've ever made ever made in terms of galvanizing industry support." Only five months later, he was shouting down a woman, saying defensively, "There is a lot of value in Vista."

Although Vista hit 60 million sales a month after release, Microsoft began letting businesses downgrade back down to XP only two months later. Most people now consider Vista synonymous with a failure-including Microsoft's COO Kevin Turner.

Xbox Console: Microsoft also spent $500 million to launch the game console in a megablitz. The blitz worked and it became an industry giant in 2001. At least in that case, the money was well spent, and the Xbox is now one of the top video game consoles.

Windows XP: Microsoft also spent $500 million marketing the new Windows XP in 2001. XP, at least, was a popular operating system--made more popular by the flop of Windows Vista.

For Windows Phone 7, Microsoft is now spending as much as any of its operating systems or big launches, both successes or failures. It's also not following the Office 2010 failure by purposefully targeting business customers and marketing its integration among Microsoft Office, Exchange, and Sharepoint, and its ease for IT departments.

This is necessary because iPhones are now being used more and more in companies, and Microsoft needs to present itself as the better business alternative.

The Windows Phone 7 could also flop because it has some negative aspects, such as a lack of multitasking and copy-and-paste functionality found on other smartphones. Because other phones from Apple and BlackBerry have already been on the market for so long, Microsoft will also face a tough time trying to carve out a little of the smartphone market share as a complete unknown.

New Android phones are also seemingly coming out every month, and it's unclear if Microsoft, a large and complacent company, is nimble enough to compete with the lightning-speed changes in the mobile industry.

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Tags consumer electronicsMicrosoftWindowsCell PhonesPhonesWindows 7softwareoperating systems

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Barbara E. Hernandez

PC World (US online)
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