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Microsoft's Price Cuts Might Be Paying Off

By Erin Kennedy and Evan Niu, CFA – Jan 15, 2014 at 10:00PM

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In order to get more Windows Phone manufacturers in its camp, Microsoft might be cutting software license fees. That strategy might just be working.

With Microsoft's (MSFT 1.05%) proposed acquisition of Nokia's (NOK 0.65%) devices business expected to close this quarter, most investors might think Microsoft will have trouble getting more vendors onboard with Windows Phone 8. However, rumor has it that Samsung (NASDAQOTH: SSNLF) is preparing to launch a new flagship Windows Phone 8 device with a 5-inch display. It's been about a year since Samsung launched its most recent Windows Phone device, the ATIV Odyssey, which is quite a long time for the South Korean company.

Furthermore, there has been speculation that Microsoft is scoring Sony (NYSE: SNE) and ZTE as possible partners as well, thanks to Microsoft's aggressive increase in the incentives it offers manufacturers. Sony fueled speculation of diversifying beyond Android also with some recent comments. The most effective weapon will always be by cutting its software license fee to use Windows Phone, especially when Android is open source. With all the talk of new Windows Phone manufacturers, perhaps those price cuts are paying off.

In this segment of Tech Teardown, Erin Kennedy discusses Microsoft getting more OEMs with Evan Niu, CFA, our tech and telecom bureau chief.

Neither Erin Kennedy nor Evan Niu, CFA, has a position in any stocks mentioned. The Motley Fool owns shares of Microsoft. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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