One of the things that Google boasts about Android, is that it is a free OS compared to Microsoft that will be charging a $15 license fee for the new Windows Phone 7. An employee with Microsoft recently spoke to AllyInsider and stated that in the end, Microsoft ends up being more inexpensive than Android due to other costs involved. The employee argues several points as to why, in the long run, Android is costlier.
A hidden cost involved with Android, is the recent Apple/HTC lawsuit, where Apple is accusing HTC of patent infringements with their Android phones. With Microsoft, there would be no need to get the manufacturer into any legal issues, it would be directly with Microsoft. But, since Google gives all source code to the manufacturers, it becomes their issue to deal with. Although with this situation, in particular, Google is said to be helping out HTC battle Apple.
Because Android is an open OS and can be developed for different devices, manufacturers must deal with having to make the components work on their devices. Resources must be used in order to develop device drivers for each individual component, such as, wifi, bluetooth, accelerometer, etc. Windows Phone 7 has a "plug and play" interface that allows devices to be created faster, cutting down on costs.
The Android community is well aware of the market fragmentation and the lack of updates in certain phones that manufacturers have abandoned (Motorola Cliq, Samsung Behold, etc) for more popular models (Motorola Droid, Samsung Galaxy S, etc). Some are even delayed because manufacturers must update their own UI on top of Android when Google releases a new update. Windows Phone 7 keeps their OS code separate from the customization code and manufacturers only need to plug-in their code, saving on resources.
Basic features that are offered on Windows Phone 7 require licenses that must be purchased by the manufacturer, including such things as audio/video codecs and improved location services. Other points made were that Windows Phone 7 has automated testing and a great user experience which would be costly for them because it is not part of the stock Android.
Although the Microsoft employee makes a compelling argument, the whole point of Android is customization and this just screams a control freak that seems more restrictive, regardless, if they feel it more costly to be "free". I say, nothing is truly free and it might well be worth the price tag for Android. What do you guys think?