According to Business Insider, Microsoft says that Android's hidden manufacturing costs are much higher than their own $15-per-unit Windows Phone 7 license. They have some very good points, but others are not so good. Here are their arguments:
• Windows Phone 7 manufacturers are protected against IP lawsuits, unlike Android licensees (although one may argue that Google may be helping HTC behind the scenes).
• The Windows Phone 7 architecture allows for easy customization, using a plug-in architecture independent of the underlying OS. Microsoft argues that Android lacks this abstraction layer, which causes manufacturers to be slow in updating their customized Android versions. This, they say, reduces cost for the OEM, who doesn't have to re-tinker the whole thing every time Microsoft updates their mobile OS.
• Windows Phone 7 supports automated testing. Microsoft claims that Android doesn't, so the quality assurance phase is more expensive for Android handset manufacturers.
• Android manufacturers have to tailor the operating system to their device, creating drivers for various components—therefore incurring in extra development cost. Windows Phone 7 is plug and play, Microsoft says. Google can argue that manufacturers need to differentiate from each other and customization will always be needed.
• Android manufacturers need to pay licenses for must-have features standard in Windows Phone 7. However, the argument is not so strong because you can argue that Microsoft Office integration is not a must-have feature. Audio and video codecs, or location services, however, are must-have features that Microsoft argues that Android handset makers need to license.
• Android manufacturers need to spend extra money to create "user experiences" comparable to Microsoft's own Metro UI, Zune or Xbox Live. While it's true that Windows Phone 7 has a nice user interface, Android manufacturers don't need to re-create this. They can happily use Google's own or ignore some features, which are not required for a phone to be successful.
If you buy the idea that Windows Phone 7 is going to rock everyone's socks off because of these features, then all of Microsoft's arguments are good. But until that's demonstrated, they would have to convince manufacturers to pay the $15 WP7 license fee based on the good arguments—which seem sound. [Business Insider]