Has Microsoft Learned Nothing?

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The following video is part of our "Motley Fool Conversations" series, in which developer Chris Bledsoe and senior technology analyst Eric Bleeker discuss topics around the investing world.

In today's edition, Eric and Chris look at reports from ZTE that give a licensing costs for Microsoft's Windows Phone. Eric finds the licensing costs, which were reported at $23 to $31, to be overly excessive. Especially with companies like ZTE that are targeting growth in the Chinese smartphone market, where prices can dip down into the $100-per-unit range, that's too steep a cost when there are free -- aside from patent litigation -- alternatives like Android. Eric thinks Microsoft hasn't evolved yet from its historical business model, where software is charged on a per-license basis. For a company that's deeply behind in the smartphone game, Microsoft would be better off licensing Windows Phone 7 for less and hoping it can make back the money through deeper integration with its Web services and other business lines. The alternative to this strategy is an increasing irrelevance in the mobile space.

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At the time this article was published Chris Bledsoe owns shares of Google. Eric Bleeker has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft.Motley Fool newsletter services recommendApple, Google and Microsoft. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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