According to Deutsche Bank analyst Jonathan Goldberg who met with Microsoft at their Redmond headquarters, Microsoft is anticipating investing a billion dollars into Windows Phone 7, with a $400 million dollar blitz attack on promotions and the other half on development, and not to mention the millions Microsoft plans to pay its handset manufacturers to offset engineering costs.

Source: Pocketnow.com

“And that’s not the half of it, Including ads and other promotions by wireless operators and handset makers, as well as the marketing activities of other partners around the world, the total expenditures for launching Windows Phone 7 could run into the ‘billions,’ ” Goldberg told InternetNews.com.

“This is make-or-break for them. They need to do whatever it takes to stay in the game,” Goldberg says. “It’s still wide open. They don’t have to take share from Android or Apple, so long as they can attract enough consumers switching from feature phones.”

With half a billion to spend on development, it seems as if Microsoft wants to guarantee there’s an abundant of quality apps and games available in the market for launch day so they can make a good first impression. Part of the money will go towards Microsoft’s financial incentives its offering to developers in order to entice them to create quality new apps and games and catch up to Apple and Android’s developed marketplaces.

Senior director of mobile services at Microsoft Todd Brix, told Bloomberg that they are providing a wide range of incentives including free tools, trial handsets, funding towards software development, and they are even offering revenue guarantees in the event apps fail to sell as expected.

Microsoft previously had compensation packages for its old operating system, but this time they are setting aside a much larger sum. Brix also mentions, “We are investing a lot to attract developers big and small to Windows Phone 7 to let them understand what the opportunity is and provide as many resources as we can to help them be successful on our platform.” “We’re open for business and we want to work with them.”

Clearly Microsoft is trying to avoid another disaster as with the Kin, by making sure they have a quality product on launch day. The problem with the Kin was that it was already outdated when it was released since it got pushed back an additional 18 months due to Microsoft’s failed communication and bureaucracy between departments, and not to mention it was overpriced. At $130 for the Kin One and $150 for the Kin Two, you could go out and get an iphone 3GS for $99 and that is exactly what everyone did.

Though Microsoft is late in the game, they have another chance to succeed and are determined to make a large impact on what seems to be a saturated smart-phone market. What is clear is that Microsoft has the funds needed to jump start WP7 into the game, but in order to compete with iphone and Android they will need to succeed in a combination of great advertising campaigns (unlike the annoying Palm Pre’s ghost lady from the future commercial), a seamless and original OS, and applications to rival competitors in order to stay afloat.