Microsoft (MSFT) To Offer Windows Phone OS Free to Indian Brands: Report

In a move that could really reshape the dynamics of the smartphone industry especially in India, Microsoft (MSFT) has reportedly decided to offer its Windows Phone operating system for free to the Indian handset makers. The Times of India reports the software giant is waiving the Windows Phone license fee for two Indian phone makers — Karbonn and Lava (Xolo). Both companies which currently make low-cost Android devices using Google (GOOG)’s free mobile OS, were recently announced at the Mobile World Congress in Barcelona, as new Windows Phone makers.

“Multiple industry sources with knowledge of Microsoft’s negotiations with Indian phone companies told [The Times of India] that it was in talks with local firms to produce affordable Windows Phone devices since last year. But the agreements were clinched only when Microsoft agreed to remove the licence fee it charges from phone makers for its OS,” the news daily said.

It’s clear that any removal of fees by Microsoft is linked directly to the company’s efforts to make Windows Phone more competitive. But as we all know, M’soft’s Windows Phone platform is failing to gain traction in the smartphone market, let alone make a significant dent in the market share of Google’s Android and Apple (AAPL)’s iOS.

Microsoft currently charges phone makers an OS license fee which is thought to be between $5 and $15 per handset. It reportedly charged Nokia between $20 to $30 for each Lumia device the Helsinki-based company sold. “For our planned Windows Phone handsets, we are not paying Microsoft a licence fee. The company is obviously exploring new models for Windows Phone. It must have realized that the older model where it licenced the OS did not work out well, even with Nokia’s support,” a senior executive with an Indian phone company told The Times of India.

As the paper notes, making the OS free shows signs of growing frustration within the Redmond-Wa.-based company. That said, if this news turns out to be true, it will lead to a stream of affordable Windows Phone-based smartphones and even tablets.

Microsoft shares are fractionally higher in pre-market hours, trading at $38 and change as of 6:14AM EDT.

h/t The verge

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