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Microsoft looks to take on Android with new generation of budget Windows Phones

One area of the smartphone market almost entirely dominated by Android is the budget handset sector. A huge range of manufacturers produce cheap Android phones, from the likes of Samsung to Chinese companies making white label devices.

Few organisations have been prepared to show any signs that they are willing to battle Android, when it comes to budget handset sales – Firefox are the notable exception. However, that could all be about to change, with the news from the Mobile World Congress trade show that Microsoft are about to embark on a big drive to lower the cost of Windows Phone devices.

Joe Belfiore, corporate vice president of Microsoft Windows Phone, said that the company are working to achieve “lower costs in terms of manufacturing, licensing and those sorts of things”.

The mention of licensing costs is particularly interesting, as it ties in with a Bloomberg report that Microsoft are also set to lower the cost of a Windows 8.1 licence to just $15 for devices that sell for under $250, in an attempt to stave of the threat posed by Chromebooks.

The policy is a remarkable turnaround for Microsoft, which has previously been highly defensive of its ability to generate significant revenues via licensing fees. The company has even complained to the European Commission that Android being sold ‘below cost’ is anti-competitive – the inference being that it is not possible for Microsoft – and potentially others – to reduce licensing costs in order to compete with Google.

The lowering of licensing fees is not the only way that Microsoft intends to compete with Android. Stringent hardware requirements will be dropped, leaving manufacturers free to use cheaper components and therefore reduce costs.

There has been growing press speculation that Microsoft will drop Windows Phone in order to fork Android. But as discussed in Android Wafer‘s own analysis, this has never been a particularly likely prospect given that Windows Phone is already a more compelling proposition than any fork of the Android Open Source Project could become.