Preston Gralla

Microsoft subsidizes developers up to $600,000 per Windows Phone app

April 06, 2012 11:18 AM EDT
How desperate is Microsoft to get developers to write apps for Windows Phone? The company is willing to subsidize them up to $600,000 per app.

With an estimated 70,000 apps available for Windows Phone, the platform lags well behind iPhone with an estimated 600,000 apps, and Android, with an estimated 400,000 apps. That's a big problem for Microsoft, because apps sell phones.

Microsoft has known for years this has been a problem. As far back as 2010 they began paying developers to write apps for Windows Phone. Even before the release of Windows Phone 7 Microsoft began the payments. Todd Brix, a senior director at Microsoft who works with app developers told Bloomberg at the time:

"We are investing a lot to attract developers big and small to Windows Phone 7 to let them understand what the opportunity is and provide as many resources as we can to help them be successful on our platform. We're open for business and we want to work with them."
A New York Times article today provided more details about those payments. The exact payment procedure isn't clear, but in many instances Microsoft will pay a third party to develop the app, not the original app developer. In that way, the developer gets a Windows Phone app without having to spend time or resources doing it. The amount of money it saves developers is substantial. The Times reports that Microsoft:
is even going so far as to finance the development of Windows Phone versions of well-known apps -- something that app makers estimate would otherwise cost them anywhere from $60,000 to $600,000, depending on the complexity of the app. The tactic underscores the strong positions of Google and Apple, neither of which have to pay developers to make apps.
Microsoft, for example, paid a third party to write the Foursquare mobile social app. It also paid for the development of a Windows Phone app for the Cheezberger Network, best known for the I Can Has Cheezburger? site filled with cat photos. Ben Huh, chief executive of the Cheezburger Network, told the Times, "They made it very easy for us. They took care of everything."

Among the other apps Microsoft has underwritten includes the Windows Phone Facebook app, which was written by a third party, not Facebook, according to the Times.

Microsoft targets big-name, well-known apps, but there are still a number of developers that so far are staying away from Windows Phone, notably Pandora and Zynga games. To punish them, Microsoft is wielding a big stick. It's paying developers to write apps to compete with them -- and it's spending a lot of money to do that. Mary-Jo Foley reports that a slide from a Microsoft marketing playbook has this bulleted item:

"Ring-fence $10M marketing investment over 3 years to promote competitors of apps developers who won't built in WP (e.g. Pandora)"
To seed the Windows Phone app market, Microsoft is doing more than subsidize developers. Along with Nokia, it's spending $24 million to create an app development program called AppCampus, located in Helsinki's Aalto University. Part of the money will also be used to spur development for Nokia's Symbian and Series 40 platforms.

Will all this work? It's still too early to know. But without a big app ecosystem, Windows Phone won't succeed, and so Microsoft's aggressiveness to seed the market is the right thing to do.