Microsoft announces an inventory of 1.5 million WP7 phones

Posted:
in iPhone edited January 2014
Microsoft has announced the shipment of 1.5 million Windows Phone 7 units into retail channel inventories, leaving the question of how well its new platform is actually selling unanswered.



Two months after WP7 phones initially hit the market, the company has issued a status report in the form of a press release phrased as an interview with Achim Berg, the vice president of business and marketing for Windows Phones.



Berg said that WP7 sales were "inline with our expectations," and stated that "phone manufacturer sales," defined as "phones being bought and stocked by mobile operators and retailers on their way to customers," had reached a milestone of 1.5 million units in the first six weeks.



Berg said this supply "helps build customer momentum and retail presence," and pointed out while that comparisons to other platforms were "a bit of apples to oranges," that "our numbers are similar to the performance of other first generation mobile platforms."



Berg did not specify whether he was referring to Apple's iPhone in 2007, Google's HTC/Android G1 in 2008, Palm's webOS Pre in 2009, Samsung's Bada Wave in 2010, or Microsoft's own KIN earlier this year, leaving WP7's similarity of performance difficult to qualify. However, the inventory levels WP7 shipments have reached are certainly not flattering when compared to the iPhone.



Early iPhone sales



In 2007, Apple introduced one hardware model with one carrier in one country, without a direct subsidy. This positioned the 8GB iPhone as a $599 device competing against other phones commonly offered for free or deeply discounted by carriers. Apple sold 270,000 in the last couple days of June, and another 1.1 million in the first full quarter it was on sale. During the last month of that quarter, Apple dropped the iPhone's price by a third, leaving it still premium priced at $399 with a two year contract.



By the third calendar quarter of 2007, Apple had already surpassed Microsoft's Windows Mobile in North American market share. Microsoft's established platform already had worldwide exposure, although the vast majority of its sales were in the US.



It wasn't until November that Apple expanded iPhone sales to Europe, which resulted in sales of another 2.3 million. The company subsequently launched the iPhone 3G in the summer of 2008 at a much lower price point, thanks in large part to conventional carrier subsidies and a slightly higher contract price. Apple sold 6.7 million iPhone 3G models in its launch quarter, at which point the company had lined up carriers in 44 countries.



At the end of that quarter, the company reported having less than 6 weeks of inventory in the channel, which the company described as optimal. That inventory padding, which consisted of "phones being bought and stocked by mobile operators and retailers on their way to customers," was stated at the time to be 2 million devices.



The Global Channel



While Microsoft's WP7 represents a new development platform, it is not a new business for the company. Unlike Apple, Microsoft did not need to slowly ramp up sales with a single carrier in the US before slowly going global over the next year. Instead, Microsoft launched WP7 across 60 carriers in 30 countries, including all four major US carriers.



It could do this because the company has established business relationships with carriers as the vendor of Windows Mobile, the previous name of Microsoft's Windows CE-based phone platform. The company also committed $500 million in promoting the WP7 launch, the same amount Apple spent on advertising for all of its products combined last year.



The WP7 inventory Microsoft reports that its hardware makers have shipped to stores within the first six weeks (including launches in Europe, Singapore, Australia, Canada, Mexico and the US) is less than the inventory Apple reported in its inventory channel for the iPhone 3G in 2008. This does not offer any suggestion that consumers are actually buying Windows Phone 7 devices. Instead, it very clearly indicates there are no real sales to report at all. Even Microsoft's lackluster Windows Mobile sales of the past few years represented far more than 1.5 million units per six weeks of sales.



By the time that Apple had created a global channel with the capacity to stock 2 million iPhones "on their way to customers," it had already sold 13 million iPhones. It a significant problem that Microsoft can only report having shipped channel inventory, despite the fact that it has WP7 distribution agreements with all four top US carriers and began selling across Europe from the first day of its launch.



Apple only began expanding beyond its first five European carriers at the launch of the second generation iPhone 3G in July 2008, and didn't reach the extent of Microsoft's sales distribution (or channel inventory capacity) until August 2008. This indicates that WP7 should actually already have much closer to 2 million phones sitting in inventory, even before end users actually being buying them. Anything less than that (and 1.5 million is significantly less) indicates that the channel doesn't want to hold much inventory of WP7 phones because retailers are not sure they're going to actually sell them.



This harmonizes with the complete disinterest in WP7 among consumers observed in the market, despite the fact the WP7 phones are not selling at premium prices like the original iPhone, but rather being promoted in buy-one-get-one offers and at deeply subsided prices, just like other phones on the market.



WP7 performing far worse than Windows Mobile 6



Additionally, Apple's carrier agreements through the beginning of 2008 were all exclusive; the company didn't even begin offering iPhones through competing carriers until that summer, and still hasn't expanded beyond AT&T (yet) in the US. Microsoft began with twice as many carriers as countries however, indicating that most of its carrier agreements are competitive, and logically should accommodate more inventory than were it only selling phones through a single carrier in each country.



Comparing Apple's historical iPhone sales to those of WP7 is not flattering even when ignoring the entire existence of Microsoft's Windows Mobile platform. However, even if we assume that Microsoft will rapidly sell through its inventory and replenish at the same rate of 1.5 million device every six weeks, the company is still well below the historical performance of Windows Mobile, which hasn't been exceptional since the iPhone shipped.







If comparisons to Apple's iPhone seem unfair, consider how Microsoft's international launch of WP7 compares to Samsung's Bada OS platform, which was launched in Europe this summer. Despite running a proprietary operating system that's less than an household name, the new Samsung S8500 Wave sold a million units in just four weeks in Europe, even before reaching the US. The phone sells unlocked for $399, and has hardware comparable to the Samsung's Android-based Galaxy S.



WP7 apps hit milestone of 4,000



Microsoft's announcement did offer some positive sounding news regarding apps for WP7. The new Windows Phone Marketplace now offers 4,000 apps from a variety of developers. The bad news is that Microsoft claimed the previous version of its mobile platform, Windows Mobile 6, had 18,000 commercial apps, but that catalog in and of itself wasn't enough to attract users, particularly in competition with the iPhone.



At the beginning of December, Microsoft announced having "nearly 4,000 apps" available for WP7, indicating that developers' interest in the platform hasn't grown by much throughout December, despite the new app store just having opened.



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Comments

  • Reply 1 of 79
    Not surprising given their bizarre advertising campaign declaring WP7 phones to be phones you won't want to actually use.
  • Reply 2 of 79
    I happen to like windows phone. I'd pick one up for my parents. Still not even close to prying my fingers from my i4.
  • Reply 3 of 79
    Hopefully it will do well enough to take share away from Google.
  • Reply 4 of 79
    "inline with our expectations," O.K. They expected to sell 12. Way to go, MS.
  • Reply 5 of 79
    Why is building 1.5 million unsold phones a milestone? Is the next milestone dumping these things in a guarded Utah landfill for a tax write off?
  • Reply 6 of 79
    MS still would not reveal numbers that actually matters.. How many sold to end-users?
  • Reply 7 of 79
    Quote:
    Originally Posted by ghostface147 View Post


    I happen to like windows phone. I'd pick one up for my parents. Still not even close to prying my fingers from my i4.



    Who buys phones for their parents?
  • Reply 8 of 79
    Quote:
    Originally Posted by Wurm5150 View Post


    MS still would not reveal numbers that actually matters.. How many sold to end-users?



    They also have not paid their app developers (payments don't start until March next year) and have not reported number on app sales.
  • Reply 9 of 79
    Quote:
    Originally Posted by ghostface147 View Post


    I happen to like windows phone. I'd pick one up for my parents. Still not even close to prying my fingers from my i4.



    If you really love your parents you'd get them iPhone 4. I got my mom an iPhone. She loved it. I was amazed at how quickly she learned to use it.
  • Reply 10 of 79
    Look, I think the numbers are bad, very very bad.



    If the numbers were even close to half a million, they would have been revealed.



    Microsoft revealed the numbers for Kinnect, so why not reveal numbers for WP7 as well?



    Because the numbers suck.



    Time will tell.
  • Reply 11 of 79
    Seems like such an odd thing to announce: we have 1.5 million phones "in the channel" during the first 6 weeks. I'm reading that as 1.5 million phones just waiting to be purchased. But manufacturers are selling which is good for OEMs and helps Microsoft convince them to continue to invest in this. But is this sustainable? How likely is it that this stocking rate continues?



    Also loved this quote from the press release:



    "We believe that to succeed in mobile you need, first of all, a great product, and we think we have that. What we?re hearing from our customers is that they?re thinking the same way."



    Doesn't state that customers like the Windows phones. Only states that Microsoft thinks they have a great phone. Are the few actual customers wishing they didn't buy your products? Do they decide they want a great product and just buy the iPhone? The press release is notable in how few signs of encouragement there are. He doesn't report specific enthusiastic responses or even areas where there might be sparks of interest.



    I can't believe I'm about to say this but MS looks like the underdog in this mobile effort. I so want creativity and possibly there is some here. There must be life beyond the iPhone and Android pages of icons paradigm. It's worked well so far but c'mon. I so want more UX designs to succeed. I haven't had enough of a demo to say I what MS did but I hope sales (and some market share) are some reward for their bold attempt and the creativity.
  • Reply 12 of 79
    Next to nothing, and actually shows a disturbing lack of interest.
  • Reply 13 of 79
    solipsismsolipsism Posts: 25,726member
    Maybe channel numbers are all MS really has to report right now. Perhaps they are waiting until the end of quarter, perhaps to announce at CES, when they get actual numbers from carriers and vendors. While this may not be the case we should keep in mind that MS is only providing the OS for the phones; they aren't the OS, HW and seller of the devices the way Apple is.
  • Reply 14 of 79
    Quote:
    Originally Posted by esummers View Post


    They also have not paid their app developers (payments don't start until March next year) and have not reported number on app sales.



    You are wrong.



    "And perhaps most importantly, developers can expect the first payout of sales to date to take place in February."





    That information was freely availible on 10/4 on this blog post.



    http://windowsteamblog.com/windows_p...or-launch.aspx



    I have no doubt that if you signed up for the developer tools and tried to publish one of your applications that you will get even more inforation about payments.



    Of course the iFan blog world thinks this is recent news and some kind of slight by MS to developers or a sign they are not doing well, even though it was the plan all along.



    Dont feel to bad, you are not alone in beliving the BS at this site.
  • Reply 15 of 79
    sheffsheff Posts: 1,407member
    Quote:
    Originally Posted by AppleInsider View Post


    Berg did not specify whether he was referring to Apple's iPhone in 2007, Google's HTC/Android G1 in 2008, Palm's webOS Pre in 2009, Samsung's Bada Wave in 2010, or Microsoft's own KIN earlier this year, leaving WP7's similarity of performance difficult to qualify. [ View this article at AppleInsider.com ][/c]



    I found that to be funny.



    Yea MS is finished in the mobile phone business, and it does not look like it has time to make a comeback in the tablet business. It should focus on Office and Xbox for the future.
  • Reply 16 of 79
    Another hit piece by AI. If they has sold 3 million, AI would have still spun it negative and compared it to the iPhone.



    I wish AI was a racing horse, it would be a sure bet every time.
  • Reply 17 of 79
    Quote:
    Originally Posted by solipsism View Post


    Maybe channel numbers are all MS really has to report right now. Perhaps they are waiting until the end of quarter, perhaps to announce at CES, when they get actual numbers from carriers and vendors. While this may not be the case we should keep in mind that MS is only providing the OS for the phones; they aren't the OS, HW and seller of the devices the way Apple is.



    Exactly. Boy, talk about ready, fire, aim. I don't seriously expect WP7 to rescue Microsoft in the mobile market or otherwise make much of a dent in the universe -- but if they do sell 1.5m units in the first three months, who's going to be calling it a complete failure?
  • Reply 18 of 79
    I finally saw one in the wild this past weekend. Of course I live in Seattle and this belong to the husband of a MSFT employee who told me that Microsoft is actually cutting off subsidies of employees who choose an iPhone...
  • Reply 19 of 79
    Quote:
    Originally Posted by bettieblue View Post


    Dont feel to bad, you are not alone in beliving the BS at this site.



    I'm sure everyone on this board feels very fortunate to have you here to correct their benighted illusions. (And so graciously, too!)
  • Reply 20 of 79
    We should be seeing the BOGO offers or similar giveaways very soon.
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