According to TechCrunch, Microsoft may have to spend large in order to get Windows Phone 7 to the point it needs to be to be competitive in today’s smartphone market:
The company could spend a half-billion dollars or more in marketing costs and payments to developers and handset manufacturers to subsidize the expense of building phones and apps, so that the Windows Phone 7 ecosystem is well-seeded at launch.Jonathan Goldberg, a telecommunications analyst at Deutsche Bank, estimates that Microsoft will spend $400 million on marketing alone for the Windows Phone 7 launch. That doesn’t include the millions it has already committed to pay for “non-recurring engineering” costs that help offset development costs for handset manufacturers.
Apparently this isn’t the end of it either, as Microsoft is rumored to spend billions in the first years for marketing and development.
The thing is, Microsoft is playing catchup, and that’s expensive. Windows Mobile 6.5 is a hideous beast compared to modern smartphone OSs, and WP7 looks amazing. You don’t get that sort of shift on the cheap, and if Microsoft wants WP7 to take off in a saturated market, they’re going to need to spend on marketing. And they can afford it.