In one of the latest chapters in the tech saga, Verizon Communications Inc. (NYSE:VZ) announced the release of a Samsung smartphone, the ATIV Odyssey, which will run on Windows Phone 8 and cost $50 (or $49.99 for those of us in the "As seen on TV" generation). Verizon and Microsoft Corporation (NASDAQ:MSFT) attempted to collaborate in 2011, with subpar results. Why is the telecom behemoth choosing now to work again with Windows, and how could the decision affect investors?
Learning from the past?
Verizon's previous foray with Microsoft Corporation (NASDAQ:MSFT) resulted in the HTC Trophy, a sleek iPhone lookalike that ran on the Windows Phone 7 platform, and seemed as fitting a competition as any against Apple. The catch? As fellow Fool contributor Evan Niu explains, Verizon still considered Google's Android its default operating system, and was also providing its wireless services to Apple iPhones, basically positioning itself to profit no matter where consumer tastes may turn.
While this might have been a shrewd revenue strategy for the telecom company, Microsoft Corporation (NASDAQ:MSFT) stood to gain little out of the Verizon deal. To top it off, the HTC Trophy was priced at a relatively high $180, and was the only Windows Phone 7 smartphone offered by Verizon at the time. Consumers prefer the ability to choose, and when a company is only offering one expensive product, their attentions will likely veer elsewhere.
Everybody likes free, right?
What a difference a couple of years can make. Besides the ATIV Odyssey, Verizon and Microsoft Corporation (NASDAQ:MSFT) are also offering the sleek red Nokia Lumia 822, which according to the Microsoft website, is available for free with a two-year contract. The new offer is marketed as a Valentine's Day deal, but is also an aggressive attempt for Microsoft to shove its way to the top of the smartphone competition.So why are these two companies getting involved with each other again? One short, simple answer: because they could both see better results from it. Verizon has been fighting back against expensive iPhone subsidies, and touted on its last earnings call that renewed efforts by both Research In Motion Limited (USA) (NASDAQ:RIMM) and Windows Phone could lead to more competition. Last quarter, Verizon saw 63% of activation activity on iPhones and noted that increased iPhone sales weighed on its profitability.