Microsoft exec Tivanka Ellawala told investors the company will not be making its own smartphone handsets.Ellawala said, “We are in the software business and that is where our business will be focused.”
True, but it’s in the hardware business, too. It makes the Xbox and it makes Zunes.
And if it wants to have a big mobile business it should take a shot at making its own handset.
Microsoft’s current plan to sell software for ~$15 per handset will barely move the needle for Microsoft. IDC estimates Microsoft will sell 32 million phones next year. At $15 per handset, revenue from Windows mobile would be $480 million.
For some context, Microsoft is expected to generate $68 billion in revenue for its fiscal 2011. For more context, Microsoft generated $200 million in revenue selling Halo Reach in a 24 hour period. In other words, a video game will generate more than half as much revenue in one week as the entire mobile division will in one year.
Meanwhile, Apple, which makes its own handset, will grab an estimated $618 dollars per iPhone sold in 2011, according to Piper Jaffray, for $29 billion in sales. (Piper estimates 46.85 million iPhones sold in 2011.)
Would it piss off handset partners? Maybe. But, a lot of Microsoft’s partners are working with Android, a free operating system. Who knows how much support these companies will even give Microsoft. After all, Android is already selling very well for them.