Who Would Really Benefit If Windows Phone 8 Were Successful?

It?s easy enough to point to some people who would benefit if Windows Phone 8 managed to crack the market and gain a decent share of it. Microsoft themselves for example: although quite how much selling smartphone software is going to move the dials on a company that size is unknown. Quite possibly not a lot if truth be told. Nokia would almost certainly benefit given that they have bet the company on that OS for smartphones. HTC, Samsung, other hardware manufacturers could benefit as well.

But I have a feeling that the telecoms companies, the airtime providers, would benefit hugely as well:

Wireless service operators typically subsidize the cost of smartphones, offering discounts to consumers to lock them into two-year service contracts. But the iPhone subsidy is as much as 60 percent higher than subsidies for Android smartphones, according to Barclays analyst James Ratcliffe.

He estimates the iPhone subsidy at about $400, compared with $250 to $300 for other smartphones. That means iPhone customers only start to become profitable for carriers about nine months after they buy the device, compared with a five- to six-month timeframe for other smartphones.

Levels of competition do vary by country: some places have more airtime providers than others. But currently Apple has huge market power as we can see from that greater subsidy they are able to extract (sure, the subsidy is directly to the consumer but the effect is that Apple can charge more for its hardware) number there. Seriously, being able to get a company the size of AT&T to provide a 50% higher subsidy to your product is a sign of market power.

If Windows Phone 8 (or indeed any other smartphone ecosystem at all) manages to make the market a tripartite one, Windows, Apple and Android, then the negotiating power of Apple is almost certain to decline. Indeed, the negotiating power of any hardware manufacturer will decline. We would therefore expect the subsidies to decline to the benefit of the bottom line of the airtime providers.

Yes, of course, there will be other things going on in the market at the same time which could confound this effect. But I think it?s still fair enough to argue that major beneficiaries of Windows Phone 8 ?succeeding? (perhaps defined as double digit market share) would be the airtime providers.

Source: http://www.forbes.com/sites/timworstall/2012/09/23/who-would-really-benefit-if-windows-phone-8-were-successful/

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