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Microsoft to receive royalties for Samsung's Android smartphones, tablets

post #1 of 34
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Microsoft on Wednesday announced it has entered a cross-licensing agreement with Samsung, in which Microsoft will receive royalties for smartphones and tablets sold by Samsung running the Google Android mobile operating system.

The patent licensing agreement will provide "broad coverage for each company's products," Microsoft said in a statement. The two companies also agreed to cooperate in the development and marketing of Microsoft's Windows Phone platform.

"Microsoft and Samsung see the opportunity for dramatic growth in Windows Phone and we're investing to make that a reality," Andy Lees, president of the Windows Phone Division at Microsoft said in a statement. "Microsoft believes in a model where all our partners can grow and profit based on our platform."

Details of the agreement are not known, but Microsoft has inked a deal with another high-profile Android device maker, HTC, which is said to net the Windows maker a high royalty rate of as much as $5 per device sold. Microsoft's licensing deal with HTC is so lucrative that some pundits have speculated whether the company makes more money off of Google's Android than it does its own Windows Phone 7 platform.

Prior to the announcement on Wednesday that it had inked a deal with Samsung, Microsoft had also secured licensing agreements earlier this month with Acer and ViewSonic, also related to Android.

Samsung said on Wednesday that it will continue to work with Microsoft on handsets, and that a "new chapter of collaboration" will begin this fall with the launch of Samsung smartphones running Windows Phone "Mango."

"Through the cross-licensing of our respective patent portfolios, Samsung and Microsoft can continue to bring the latest innovations to the mobile industry, said Dr. Won-Pyo Hong, executive vice president of global product strategy at Samsung's mobile communication division.



Microsoft's new licensing deal comes as Samsung is involved in a separate legal dispute with Apple, in which Apple has accused Samsung of copying the look and feel of the iPhone and iPad. Samsung has fired back with its own lawsuits accusing Apple of violating patents related to 3G wireless technology.

The patent litigation has found some early success for Apple, This month, which won a permanent ban on sales of the Samsung Galaxy Tab 10.1 in Germany, while the device has also been barred from sale in Australia. Last month, some Samsung Galaxy-branded phones were also barred from sale as a result of an Apple lawsuit.
post #2 of 34
It is just a matter of time before Moto gives up and pay MS. Ballmer was right about one thing. There is nothing free about Android.
post #3 of 34
"thank you, Page." Steve Ballmer.
post #4 of 34
Could Samsung potentially use this licensing deal to aid their case against Apple? I'd like to see Windows Phones in place of Androids, tbh. Depends how much the licensing dissuades OEMs, although Samsung are looking at Bada and HTC at webOS now (allegedly).
post #5 of 34
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Originally Posted by matrix07 View Post

"thank you, Page." Steve Ballmer.

Amazon would follow the example. So, "Thank you, Bezos, too!"
post #6 of 34
Quote:
Originally Posted by jj.yuan View Post

Amazon would follow the example. So, "Thank you, Bezos, too!"

At the end of the year, Microsoft should give a good bonus to their Android department.
post #7 of 34
Once Oracle, Microsoft and Apple all get their per-device royalty cut (if Apple goes that way), that "free" Android OS is going to start getting expensive.

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post #8 of 34
Quote:
Originally Posted by EricTheHalfBee View Post

Once Oracle, Microsoft and Apple all get their per-device royalty cut (if Apple goes that way), that "free" Android OS is going to start getting expensive.

I believe you'll find that nearly all the larger mobile device suppliers are paying royalties on IP. In just the past few months Apple agreed to pay a royalty to Nokia for every iPhone sold. I think Apple may also be paying a royalty to Motorola as well, since there's a very quiet lawsuit for contract violations that Apple has requested be sealed.
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post #9 of 34
Quote:
Originally Posted by Gatorguy View Post

I believe you'll find that nearly all the larger mobile device suppliers are paying royalties on IP. In just the past few months Apple agreed to pay a royalty to Nokia for every iPhone sold. I think Apple may also be paying a royalty to Motorola as well, since there's a very quiet lawsuit for contract violations that Apple has requested be sealed.

Probably, but the original point still stands. One of the things that made Android such an attractive option for manufacturers was the low cost, without that advantage, it might start to get interesting for them to start looking at other mobile OS's. Especially now that the market is drowning in generic uninteresting Android phones, most manufacturers are not really making much money off of it, and Google is going to compete directly through Motorola (which probably means Motorola deviecs will have a competitive advantage).
post #10 of 34
Quote:
Originally Posted by Gatorguy View Post

I believe you'll find that nearly all the larger mobile device suppliers are paying royalties on IP. In just the past few months Apple agreed to pay a royalty to Nokia for every iPhone sold. I think Apple may also be paying a royalty to Motorola as well, since there's a very quiet lawsuit for contract violations that Apple has requested be sealed.

Why do you feel it necessary to try and divert every thread to your "mildly-anti Apple" agenda"?

It blinds you to the bigger picture. See d-range's comment above.
post #11 of 34
Quote:
Originally Posted by Gatorguy View Post

I believe you'll find that nearly all the larger mobile device suppliers are paying royalties on IP. In just the past few months Apple agreed to pay a royalty to Nokia for every iPhone sold. I think Apple may also be paying a royalty to Motorola as well, since there's a very quiet lawsuit for contract violations that Apple has requested be sealed.

Yes, but there's lots of cross-licensing where company A pays B, but makes money back from C and so on.

In this case, you have three companies all going after one (Google/Android), and Google doesn't have anything to trade back (cross license) with.

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post #12 of 34
Who wins/loses in the patent war, Apple or Google?
post #13 of 34
Quote:
Originally Posted by d-range View Post

Probably, but the original point still stands. One of the things that made Android such an attractive option for manufacturers was the low cost, without that advantage, it might start to get interesting for them to start looking at other mobile OS's. Especially now that the market is drowning in generic uninteresting Android phones, most manufacturers are not really making much money off of it, and Google is going to compete directly through Motorola (which probably means Motorola deviecs will have a competitive advantage).

You're absolutely correct, and your original point is perfectly valid. If Android's only attraction is that it's very inexpensive to utilize, then Android may not be as advantageous to use as it was at first. My apologies if you took my reply as being dismissive of your opinion.

My post was only intended to make it clear that all the manufacturers, whether they created their own OS or not, are likely paying royalties to their competitors, and some of those may be significant fees. There's probably some segment of our members and visitors that are unaware of that.
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post #14 of 34
Can someone please point out how Samsung is responsible for Google's patent infringements? What I just don't understand is how a customer of a product should be held liable for the infringement of the producer. For instance, Apple buys a chip that does something for the iPhone, however, it's later discovered that the chipmaker infringed on someone's patent. So why should Apple be held liable? It's merely a customer of the product, not the infringing party. So, that leads me back to how and why Samsung should be held to the fire for Android?
post #15 of 34
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Originally Posted by jr_b View Post

Who wins/loses in the patent war, Apple or Google?

The people of the world lose.
post #16 of 34
Quote:
Originally Posted by ruel24 View Post

So, that leads me back to how and why Samsung should be held to the fire for Android?

Because they are making money with it. It would be much harder to go after Google who is only making money from advertising in Android.
post #17 of 34
Quote:
Originally Posted by Gatorguy View Post

I believe you'll find that nearly all the larger mobile device suppliers are paying royalties on IP. In just the past few months Apple agreed to pay a royalty to Nokia for every iPhone sold. I think Apple may also be paying a royalty to Motorola as well, since there's a very quiet lawsuit for contract violations that Apple has requested be sealed.

Quote:
Originally Posted by piot View Post

Why do you feel it necessary to try and divert every thread to your "mildly-anti Apple" agenda"?

It blinds you to the bigger picture. See d-range's comment above.

+++ They're a nuisance -- but you just gotta' ignore those pesky little gnats.
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post #18 of 34
Meh. Wake me when this thread reaches 200

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post #19 of 34
Quote:
Originally Posted by jr_b View Post

Who wins/loses in the patent war, Apple or Google?

Quote:
Originally Posted by DarkVader View Post

The people of the world lose.

To the contrary, the people of the world win!


The patent system is imperfect, and has become overwhelmed by technology.

But, without some sort of protection -- there would be little incentive for invention.

Fortunately, our Founding Fathers were prescient enough to include the following in the U.S. Constitution.

In Article I, section 8, the U.S. Constitution:

Congress shall have power . . . To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.
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post #20 of 34
Licensing deals made Microsoft what it is today. From the original DOS deal that Bill Gates cut with IBM, to the Windows 3.1 deal he shoved down all PC manufacturer's throats (forcing them to pay Microsoft for every PC they shipped even if it didn't run Windows), to the volume Office licensing and forced upgrade deals cut with corporate IT departments around the world, ad nauseam.

Apple haters say that Apple's success is due to "marketing." I'd say that Microsoft has vastly out-marketed Apple. It's amazing that Apple even survived the '90s when you consider how well Microsoft has shut out other, better, competing products: OSes (e.g. OS/2), software platforms (e.g. Netscape), and productivity apps (e.g. Visicalc, WordPerfect).

Microsoft's PC era success came from locking corporate buyers into long-term contracts, then pushing upgrades on those buyers. Not from consumer appeal. Microsoft customers were forced to continue buying Microsoft products. In contrast, Apple's post-PC era success comes from the appeal of its products and services, "pulling" customers back for more. Not from corporate licensing deals (although that may soon factor into Apple's growth.) Apple customers aren't forced to buy more Apple products, but they still do. Magical.

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post #21 of 34
This is all getting quite interesting.

"Android" might soon be the most expensive smartphone OS, but the only licensable one with a relevant amount of phone apps.

Amazon and Baidu might both have to pay up as well, or even face injunctions if Oracle is successful (the Fire might be aptly named after all).

Samsung now supports 4 smartphone systems (Windows Phone 7, Bada, Android and Tizen), with Android getting less attractive every single day (Motorola in bed with Google, royalties ad inf, and still no tablet apps).

Google is approaching a dominant position in the smartphone market, financed by its dominating position in the online advertising market, with losses piling up like crazy (Motorola purchase, IBM licenses, and soon some nice cheque for Oracle). At some point this will lead to some naughty questions.

No idea how this will end, but somehow I believe the current positions in the smartphone race are not necessarily written in anything more than sand.
post #22 of 34
Quote:
Originally Posted by Robodude View Post

Could Samsung potentially use this licensing deal to aid their case against Apple? I'd like to see Windows Phones in place of Androids, tbh. Depends how much the licensing dissuades OEMs, although Samsung are looking at Bada and HTC at webOS now (allegedly).

How would it help Samsung in their case against Apple? "Yes, we were illegally using someone else's technology, too, but they agreed to let us pay them lots of money so that we wouldn't have to shut down our cell phone division". I guess I'm having a hard time figuring out how that could possibly help Samsung.

Quote:
Originally Posted by jr_b View Post

Who wins/loses in the patent war, Apple or Google?

In the end, it is very unlikely that many (if any ) permanent injunctions will be issued. So it comes down to royalties.

Apple can easily afford substantial royalties. Their margins are the best in the industry (by far) and they have the ability to raise prices even further if necessary. Companies making phones based on Android, OTOH, are already operating at very low margins - even without paying royalties. If significant royalties are tacked on, their low priced strategy goes out the window.

The real winner is likely to be Microsoft (Windows Mobile 8) and whoever buys WebOS from HP.
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post #23 of 34
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post #24 of 34
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post #25 of 34
Quote:
Originally Posted by Dick Applebaum View Post

+++ They're a nuisance -- but you just gotta' ignore those pesky little gnats.

was he lying?
post #26 of 34
Quote:
Originally Posted by ruel24 View Post

Can someone please point out how Samsung is responsible for Google's patent infringements? What I just don't understand is how a customer of a product should be held liable for the infringement of the producer. For instance, Apple buys a chip that does something for the iPhone, however, it's later discovered that the chipmaker infringed on someone's patent. So why should Apple be held liable? It's merely a customer of the product, not the infringing party. So, that leads me back to how and why Samsung should be held to the fire for Android?

Google wrote an open implementation of an operating system and made code available to manufacturer. Samsung chose to use and modify it, wrapping it into an actual product that gets paid for.

When you sue over IP you either sue to stop it's use altogether via injunction, or sue for royalties. You can effectively only get the royalties from someone who is selling the IP without permission. So Samsung gets sued because they chose to sell MS's IP in Android, rather than rewriting Android to avoid MS's IP. The selling part is key because that's where the money is.

Google is in relatively gray area, phone manufacturer-wise, because they don't force anyone to use Android. Oracle seems to be the only folks exploring that right now, but their motivation is a little different because I think Oracle wants to kill the DalvikVM since it is a threat to the rest of Oracles JVM licensing business. Or if not kill it, explicitly make Dalvik Java compliant and heftily licensed, which is not a small change to Dalvik on it's own.
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post #27 of 34
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Originally Posted by MacRulez View Post

With today's consumer segment we have a different sort of lock-in:

When you buy an Apple computer or an Apple phone, the money you spend on apps may well exceed the cost of the device, and you'll never have the choice to use those apps on devices made by anyone else.

In contrast, if you buy software for your Dell running Windows or your Samsung running Android, you can move to a Lenovo running Windows or an HTC running Android and you get to retain your full investment in apps.

That's a strawman. I can't take that investment in Android apps to Rimm, Symbian, MeGo, WinPhone7, WinPhone8, iOS, WebOS, or any other platform. It's not just the manufacturer that matters, it's largely the platform and one is just as locked in as the other when you get to brass tacks.
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post #28 of 34
Quote:
Originally Posted by Hiro View Post

That's a strawman. I can't take that investment in Android apps to Rimm, Symbian, MeGo, WinPhone7, WinPhone8, iOS, WebOS, or any other platform. It's not just the manufacturer that matters, it's largely the platform and one is just as locked in as the other when you get to brass tacks.

+1
My thoughts exactly. Freedom is not having a bigger jail cell.

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post #29 of 34
Quote:
Originally Posted by d-range View Post

Probably, but the original point still stands. One of the things that made Android such an attractive option for manufacturers was the low cost, without that advantage, it might start to get interesting for them to start looking at other mobile OS's. Especially now that the market is drowning in generic uninteresting Android phones, most manufacturers are not really making much money off of it, and Google is going to compete directly through Motorola (which probably means Motorola deviecs will have a competitive advantage).

One possibility is that we'll see more of what Amazon just did, which is to take Android and fork it into a locked down channel for the manufacturer's ecosystem. Saves having to build your own OS from scratch, but you get to boost your margins with content sales. The game console model, if you will.

Of course, Amazon is well situated for this strategy since they already have a lot of content at their disposal, but it doesn't seem out of the question that a big Android licensee might take a look around at the sea of barely distinguishable Android handsets, which are selling for very low profit, and decide that a more customized experience might be the way to go.

Especially as we move from the "everybody needs to get a smartphone" phase into the "everybody has a smartphone" phase. Once the market is fairly saturated, it's all about poaching customers from someone else. If "Android" currently still has a little glamour to it, as your first smartphone OS, that's shortly to end. When it does, just putting that little robot on your ads and hollering about the awesome specs isn't going to give you any market differentiation whatsoever.

Which means going beyond a few custom screens into a fully forked "unique" experience might look like a great strategy to get some specialness attached to your brand, while giving you an opportunity to lock in some content sales at the same time.
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post #30 of 34
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post #31 of 34
Quote:
Originally Posted by Suddenly Newton View Post

+1
My thoughts exactly. Freedom is not having a bigger jail cell.

+++ We have a winner!
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post #32 of 34
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Originally Posted by ruel24 View Post

Can someone please point out how Samsung is responsible for Google's patent infringements? What I just don't understand is how a customer of a product should be held liable for the infringement of the producer.

Although you already got one answer, here is another way to look at it. If this were not the case, there would be no protection for IP at all. Suppose that company A wanted to use company B's IP without having to pay for it. All they would have to do would be to set up shell company C to steal the IP, and then use C's infringing product without any liability.
post #33 of 34
Quote:
Originally Posted by Robodude View Post

Could Samsung potentially use this licensing deal to aid their case against Apple? I'd like to see Windows Phones in place of Androids, tbh. Depends how much the licensing dissuades OEMs, although Samsung are looking at Bada and HTC at webOS now (allegedly).

Nope, Microsoft's patents are mainly untested ones relating to how Linux works.

Microsoft sits on them, biding their time until someone makes it worth their while to come in waving a big stick.
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post #34 of 34
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Originally Posted by DarkVader View Post

The people of the world lose.

Nooooooooo!!!
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