Is It Important For Microsoft Corporation (MSFT) To Have A Signature Lumia Smartphone?

Microsoft Campus
The Visitor’s Center at Microsoft Headquarters campus is pictured July 17, 2014 in Redmond, Washington. (Stephen Brashear/Getty Images)

For many months, there has been speculation about a Lumia 1030. Its parts have been seen in the supply chain and also by online tech media. Incidentally, both Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) have built hardware to demonstrate the capability of their Smartphone softwares. Microsoft Corporation (NASDAQ:MSFT) may well be following their footsteps.

Apple developed the iPhone for commercial purposes. However, Google’s Nexus is a technology demonstrator for manufacturers and a benchmark device for users worldwide. Microsoft may be selling smartphones but selling loads of devices may not be the ultimate objective of the company.

If Microsoft goes all out and leverages the latest hardware, it can assemble a Smartphone that engages the public interest. The publicity that the new Smartphone brings would benefit Windows 10 as well. Also, each user of the smartphone will also be utilizing Microsoft cloud services.

There is also the pride factor at stake. Demonstrating a device to highlight the advantages of Windows 10 in the mobile form does count for something.

All products are meant to sell, but Microsoft’s attention should not be limited to selling its flagship smartphone. Microsoft’s present key offering is software, and thus hardware and products should be oriented to draw people to use the organization’s cloud services.

The benefit of a flagship smartphone loaded with Microsoft’s software is not to capture significant market share but to draw people into the Microsoft family. Whether it’s a direct sale, encouraging people to purchase other smartphones in the Lumia stable, or to motivate a manufacturer to build a device that functions on its own on-ramp, a flagship is meant to produce not revenue but inspiration.

It means that the device would not necessarily be a profitable venture. There would be high costs in terms of research and development. The expense involved in manufacturing and distribution would have to be weighed against the longer term results of brand enhancement and significant customer base expansion.