Can Microsoft’s Windows Phone 7 compete with the iPhone 4S?

The latest version of the Apple iPhone made an appearance today. The 4s, not the iPhone 5 as was anticipated. The question is does this help Microsoft with its Windows Phone 7 marketing?

Pricing

Microsoft and Nokia entered an agreement earlier this year to produce mobile phones. The marketing strategy behind this is that Nokia has a strong distribution and marketing system in Latin America, Eastern Europe, Middle East and Asia. Consequently, Microsoft would have a larger distribution point available to make the Windows Phone 7 a global entity. However, this largely relies on the assumption that Apple does not undercut the Microsoft plan with a cheaper mobile phone system.

A cheaper iPhone with a strong global launch pattern would have been a real marketing nightmare for both Microsoft and Nokia.  Both planned to undercut the iPhone system by selling smartphones in the $150-$300 average price range. Rightly so all new iPhones in the past have come out with average price levels above $650 – partly subsidized to the tune of $200 by leading US carriers.

The iPhone 4S
The technology is impressive, but from Microsoft’s point of view, it is the pricing that may be the sticking point.

• The iPhone 4S starts at $199 for a 16GB device, then $299 for 32GB, and $399 for 64GB.
• The iPhone 4 moves to $99.
• And the iPhone 3GS is now free (with a two year contract)

Can Microsoft and Nokia compete?
With this type of pricing for the mobile phone can Microsoft and Nokia compete? Ever since the Windows Phone 7 made its debut, there was more publicity than actual sales. The Windows Phone 7 has about 2% of the mobile phone market. Playing catch up has been hard for Microsoft in this market and it may be hoping that the price value of the Windows Phone 7 pushes its products out the door faster than before. But with Apple making the new price plans available, it may be hard for Microsoft to make a dent.