Insights into how technology and the outsourcing of R&D are changing the software industry

UPDATE (8/27/10): TechCrunch is now reporting that DeutscheBank telecoms analyst Jonathan Goldberg estimates that Microsoft will spend $400M for the marketing launch of Windows Phone 7 on top of the monies paid to developers and handset makers. Goldberg says “This is make-or-break for them. They need to do whatever it takes to stay in the game.”

Since three-quarters of the people on the Internet don’t know who HennyYoungman is, I hope a few people stuck around after reading the headline.

There’s been a lot of discussion around Microsoft’s potential for success with Windows Phone7, which will be launching sometime this fall (the final developer tools will be available for download on September 16th). I was talking yesterday with a mobile developer friend about iPhone v. Android, what his impressions were of the Torch. Then the conversation turned to Microsoft Phone7.

I commented that — notwithstanding the unique and interesting UI, the importance of integration with Microsoft apps in the Enterprise and the allure of mobile XBOX for consumers — I thought they were going to have a tough climb (amongst many reasons) given that they want to earn revenue from the handset makers for licensing the OS  while Google gives away Android for free, whilst Apple and RIM offer their own branded devices.

But he told me that not only is Microsoft offering to pay developers to build apps in advance of the launch (a standard operating procedure for Microsoft product launches, yet worlds different than the organic efforts that have made the Apple and Android ecosystems so vibrant), but that he heard that Microsoft has had to give beaucoup bucks to handset makers as inducements to build the phones (hence, the “take my Mobile OS, please” headline)! I guess not entirely surprising as the leading smartphone makers have either committed to Android in a big way or are supporting their own OS plans (can you hear the Symbian death rattle) and/or dreams (see Bada, Samsung).  Heck, arguably their biggest licensee was Palm and now they don’t exist and HP’s going to use WebOS to try to bury Microsoft’s mobile efforts even deeper.

This may be in fact what it takes to get Phone 7 off the ground, but I’d love to hear how the conversation goes when Microsoft comes back and starts asking for license revenues.

So what do you think? Does Windows Phone 7 have a chance? Are you planning to buy one? Are you planning to develop apps for it?