Windows Phone Sales Not So Bad, Actually

A Look At The Numbers Behind the 1.5 Million Units Sold to Retailers and Carriers

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Microsoft's first official sales figures for the much-hyped Windows Phone 7 are out and one thing's clear: the handset is off to a slow start. Across handset manufacturers, 1.5 million units carrying Microsoft's refreshed mobile software sold in the first six weeks, according to Achim Berg, Microsoft's vice president of business and marketing for Windows Phones.

This figure is the first clue on how well the high-profile launch -- Microsoft tapped hot shop Crispin Porter Bogusky for Windows Phone's "The Phone to Save us from Our Phones" ads -- is paying off.

UPDATE: The 1.5 million figure is the first clue, but to be clear, Microsoft Windows 7 phones haven't reached 1.5 million consumers. The stat refers to the number of handsets that manufacturers sold to retailers and carriers, as a commentator on our original post points out below. A Microsoft spokeswoman declined to provide a consumer sales figure, saying only that the company is "pleased with the initial response."

While the Windows Phone's sales are slow by today's smart phone standards -- 3 million iPhone 4s flew off the shelves in less than a month this summer -- at least Microsoft didn't repeat the Kin disaster, and so far the phone is outselling Google's Nexus One, as well as the first iPhone, meaning this would be a competitive product if Microsoft was selling it in 2007.

Let's take a look at the numbers:

$500 million
The marketing budget for Windows Phone has been reported as high as $500 million--the company has never confirmed this figure. However, Microsoft execs told Ad Age that the Windows Phone campaign was "competitive" with a past $100 million effort for Droid phones.

Divide that $500 million ad budget by 1.5 million sales and that's more than $300 in marketing cost per unit sold. While that's undoubtedly a high acquisition cost, it only includes Microsoft's ad investment and not AT&T support. The carrier was a marketing partner and helped launch the new set of devices, including some ads and retail support.

That's the cost of the Windows Phone Samsung Focus with a two-year contract with AT&T. The devices retails at $499.99 with no commitment.

74 days
Compared to past first-generation releases, Windows Phone is faring better than both Apple and Google's first mobile handset, Nexus One. It took Apple more than 10 weeks--74 days--to sell 1 million first-generation iPhones in 2007. In the 74 days following launch, 1.05 million Droid phones and 135,000 Nexus One phones were sold, according to analytics firm Flurry.

3 million
That's not to say Windows Phone doesn't have a lot of catching up to do in this decade. In 2010, Apple sold 3 million iPhone 4 handsets in less than four weeks.

Microsoft had only 9.7% in U.S. smart phone market in October, according to ComScore. Compare that to Blackberry parent Research in Motion's 36%, Apple's 25% and Google's 24%.

However, Microsoft's not worried.

"Our numbers are similar to the performance of other first generation mobile platforms," Mr. Berg said in an interview on Microsoft's press site. "We're comfortable with where we are, and we are here for the long run; Windows Phone 7 is just the beginning."

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