Microsoft’s $1 Billion Smart Phone Bet? That’s Chump Change [Microsoft]

Microsoft is rapidly developing Windows Phone 7 , a sensible phone platform to compete with iPhone, Android and BlackBerry. It’s due this autumn, though we don’t yet know the dates, prices and carriers. We do know something, the launch might be massive. Like billion-dollar massive.

To be certain that, Microsoft isn’t starting from a comfy position here. By killing off its earlier smart phone OS, Microsoft signalled that it’s willing to fight to the death (in this market). And it’s starting the fight on its back. So, how much is this insane mobilization going to cost the single-time alleged monopolist? A billion? More?

TechCrunch cites Deutsche Bank telecom analyst Jonathan Goldberg , saying that the company will spend $400 million on marketing alone this year. The complete spent out of Microsoft’s pocket could top $1 billion including development. Goldberg is quoted saying that he was told that between Microsoft and its carrier and hardware partners, ” billions” could be spent. Inside the first year.

Super-keen Microsoft watcher Mary Jo Foley says a billion ” could be a small price to pay” for Microsoft to come back within the game, citing its $62.5 billion 2010 revenues and its increasingly noticeable ” lack of a credible and coherent answer to the iPhone and Android.”

(Msnbc.com is a joint venture of Microsoft and NBC Universal, but nobody is telling us how much the company is spending on its Windows Phone 7 launch.)

So, what does a billion dollars mean inside the wireless world? a number of years ago, it might probably had been significant, but now, it’s just pennies in a totally large pig. Listed below are some numbers to position it in perspective:

$1.2 billion – the volume HP paid to obtain Palm, a pretty bustling phone maker with a promising operating system and phones already within the market

$1.5 billion – a conservative estimate of the way much Apple made selling the 8.4 million iPhones it reported selling from April through June of this year

$8 billion – the approximate amount raked in by the sale of 61.6 million smartphones worldwide in that same quarter, just a three month period, as tracked by Gartner

$13 billion – the volume Microsoft spent across all divisions on sales and marketing last year (R&D cost ‘em $8.7 billion)

$15 billion – the volume of money that RIM, maker of the No. 1 selling smart phone platform within the U.S., grossed worldwide during its fiscal 2010 selling BlackBerrys and frequently nothing else (with profits of $2.48 billion)

$40 billion – an even guess at the once a year total revenue that smart phone sales will usher in this year, based on average prices and current sales projections from assorted analysts

$250 billion – the volume of money carriers will absorb from selling wireless data service alone – not counting text messages! – by 2014, in line with iSuppli (Hint: the reason is carriers can assist sell these phones, with subsidies, revenue sharing or any other back-room deal that gets worked out)

Almost forgot one figure:

$1 billion – an incredibly conservative guess at what quantity of money Microsoft lost by developing and then killing off the Kin not-so-smart phone, consistent with Foley , including a $240 million write-off when the project was killed

So yeah, a billion dollars, Microsoft? Just a billion? I’m no accountant, but so that you can come again into this business, you’re going to ought to spend till it hurts. A billion is what we’ll politely call ” a great start.”

Wilson Rothman, former Gizmodo features editor, is now deputy Technology & Science editor at msnbc.com. One can miss him around these parts, but you could always catch up with him on Twitter at @wjrothman .

Illustration by Sam Spratt. Investigate Sam’s portfolio and become keen on his Facebook Artist’s Page .

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