Microsoft boasts patent licenses with over half of Android market

Posted:
in iPhone edited January 2014
Microsoft announced on Sunday that a new patent license agreement with original design manufacturer Compal means that companies accounting for more than half of all Google Android-based devices now have agreements with the software giant.



On the heels of the Redmond, Wash., Windows maker's announcement that it had reached an agreement with Compal to receive royalties in exchange for patent coverage for the Android or Chrome platform, the company's General Counsel Brad Smith and Deputy General Counsel Horacio Gutierrez posted an official blog post touting the new statistic.



The deal marks Microsoft's tenth license agreement with an Android partner. Momentum appears to be in the company's favor, as nine of the ten licenses have come in the last four months alone. Some pundits have gone so far as to speculate that Microsoft makes more money from its patent licenses to Android than it does off of its own platform, Windows Phone 7. For instance, the company's agreement with HTC is said to bring in $5 per Android device sold by the Taiwanese handset maker.



Microsoft was also said to be seeking $15 per device from Samsung. The two companies reached a cross-licensing agreement in late September, but declined to reveal how much Samsung would pay to Microsoft in royalties.



However, Windows Phone boss Andy Lees worked to dispel the myth that Microsoft receives more revenue from Android patent licenses than Windows Phone sales during an interview last week.



"I don?t know where the, you know, one making more money than the other comes from. We certainly want to sell a lot of Windows Phone," Lees said at AllThingsD's AsiaD conference in Hong Kong.



Sunday's post included a chart entitled "Android Patent Licensing and Litigation" showing that Microsoft has reached agreements with all but a few Android ODMs and OEMs. According to the chart, the company still has pending litigation with Motorola Mobility, Inventec, Foxconn and Barnes & Noble. The graphic also depicts Apple's ongoing legal action against rivals Motorola, Samsung and HTC.







Smith and Gutierrez went on to point out that Microsoft spent roughly $4.5 billion to license patents from other companies over the past decade. Over the same period, the company reached 1,133 agreements to license its patents "to other companies that share [its] desire to respect IP rights."



The post also included a pie chart showing that 55 percent of the worldwide ODM market by revenue have Android licensing agreements with Microsoft. Meanwhile, the company claims that 53 percent of the Android smartphone market in the U.S. in terms of units are licensed.











"For those who continue to protest that the smartphone patent thicket is too difficult to navigate, it's past time to wake up," the authors concluded. "As our recent agreements clearly show, Android handset manufacturers are now doing the same thing. Ultimately, that's a good path for everyone."



Apple, on the other hand, has indicated a divergent approach to its patents from Microsoft. Court documents from a dispute between Apple and Samsung in Australia reveal that the company is only willing to license "lower level patents." The company's strategy appears to involve holding back some of its more advanced inventions as iOS exclusives in order to differentiate its products.



Apple co-founder Steve Jobs told biographer Walter Isaacson in an interview that he would spend his "last dying breath" fighting to destroy Android because he believed it was a "stolen product."



"I'm willing to go thermonuclear war on this," Jobs reportedly said.



Jobs also reportedly told former Google CEO Eric Schmidt that he wasn't interested in settling with Android makers over patent violations.



"I don't want your money. If you offer me $5 billion, I won't want it. I've got plenty of money. I want you to stop using our ideas in Android, that's all I want," Isaacson quoted Jobs as having told Schmidt.
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Comments

  • Reply 1 of 46
    solipsismsolipsism Posts: 25,726member
    This is so hysterically absurd. Can Android really have long term viability for OEMs when MS already costs the platform so much, and ywith Oracle and Apple readying a legal armada on two other fronts?
  • Reply 2 of 46
    Quote:
    Originally Posted by solipsism View Post


    This is so hysterically absurd. Can Android really have long term viability for OEMs when MS already costs the platform so much, with Oracle and Apple readying a legal armada two other fronts?



    Probably.



    Oracle is less of a threat than people think but we will see how that pans out. Apple as well as they seem to focus their efforts on more specific things. Microsoft is an extortionist through and through and I'm shocked people are all for it simply because they are being anti-Android.



    Apple is the most just of the anti-Androiders especially when going after Samesung.



    But alas, the patent system being what it is, and Microsoft probably having a patent on everything under the sun I could understand why they feel the need to strong arm everyone for protection money.



    They stayed static in the mobile OS field...OSX is gaining on them, Android took all their old customers...and their new OS isn't selling well.



    They still gotta eat.



    PS...articles like this are why you have so many "fandroids" on this site.
  • Reply 3 of 46
    Quote:
    Originally Posted by solipsism View Post


    This is so hysterically absurd. Can Android really have long term viability for OEMs when MS already costs the platform so much, with Oracle and Apple readying a legal armada two other fronts?



    I don't think Oracle is a fraction of a threat to the platform.



    Microsoft may make some money off of the Samsung devices, but in the end it won't be near $15 per device.



    We'll see how it all pans out. But Android and the OEMS aren't going anywhere.
  • Reply 4 of 46
    majjomajjo Posts: 574member
    Quote:
    Originally Posted by solipsism View Post


    This is so hysterically absurd. Can Android really have long term viability for OEMs when MS already costs the platform so much, with Oracle and Apple readying a legal armada two other fronts?



    HTC has been recording record profits for a while, even with the licensing agreement already in place. Samsung, its too early to tell; but I doubt they would make an agreement with MS if it turned them upside down.



    We'll see how the landscape changes with the Oracle case, but Oracle and MS aren't stupid. Android is a potential golden goose, killing it is probably not in their best interest.
  • Reply 5 of 46
    drdoppiodrdoppio Posts: 1,132member
    Quote:
    Originally Posted by solipsism View Post


    ...Can Android really have long term viability ...



    Speaking of long term, many of the patents that serve as grounds for licensing are not entirely new. A few years from now they will be in the public domain, and even if Android makers are paying for them now, they will not have to in the future.



    Microsoft and Apple should have killed their competition three years ago. It's too late now. Android is here to stay.
  • Reply 6 of 46
    Quote:
    Originally Posted by solipsism View Post


    This is so hysterically absurd. Can Android really have long term viability for OEMs when MS already costs the platform so much, with Oracle and Apple readying a legal armada two other fronts?



    It's hard to say. Think of it this way: if you're a handset maker and you don't have your own phone OS (and the infrastructure needed to keep it current), then you have to use someone else's. Android doesn't have to be free (as in free beer) to be viable for OEMs, it just needs to be competitive in terms of benefit-to-cost. Even though patent licensing means that the cost isn't zero (it was never zero to begin with), it's still a good choice for OEMs because Microsoft hasn't gotten much traction with WP7. Other phone OSes aren't being licensed (QNX, webOS, etc.) The alternative is for a handset maker to go back to Linux, fork it, and write their own "touch" libraries and UI on top of that. You'd think HTC and/or Samsung have the resources to do that (HTC Sense, TouchWiz shows they aren't totally dependent on Google), but then they'd be vastly behind the curve on building an App Store business that could compete with iOS and Android. So again, it's better for them to use either Android or WP7. It won't be free, but at least if Android cost enough, WP7 might start to look like a credible alternative.
  • Reply 7 of 46
    nairbnairb Posts: 253member
    Says a lot for Microsoft mobile OS when a phone manufacturer is better off paying Microsoft money not to use their OS.
  • Reply 8 of 46
    Apple isn't getting squat from Android except loss of market share. That's how Microsoft makes so much money. Wall Street loves those sort of tactics of bleeding other companies dry. Oracle is a disgrace. Google has made Oracle its biatch.
  • Reply 9 of 46
    asciiascii Posts: 5,941member
    Wow Microsoft, enjoy your box of licenses. You're really changing the world. You'd better boast some more.
  • Reply 10 of 46
    nkalunkalu Posts: 315member
    What is Android then?

    Half of it is a "rip off of Apple" (according to Steve Jobs), the other half is Microsoft?
  • Reply 11 of 46
    aizmovaizmov Posts: 989member
    Why can't Apple do the same? As much as I hate Android it is not going away so better for Apple to profit out of it instead.
  • Reply 12 of 46
    steven n.steven n. Posts: 1,120member
    Makes you wonder when Google will pull the plug on Android. With Amazon cutting Google 100% out of the mix, Oracle extracting billions from Google when that opera is finished, Apple getting major functionality removed and MS making more $$$ off of Android than Google...



    How many billion in losses will it take Google to finally pull the plug?
  • Reply 13 of 46
    drdoppiodrdoppio Posts: 1,132member
    Quote:
    Originally Posted by Steven N. View Post


    Makes you wonder when Google will pull the plug on Android. With Amazon cutting Google 100% out of the mix, Oracle extracting billions from Google when that opera is finished, Apple getting major functionality removed and MS making more $$$ off of Android than Google...



    How many billion in losses will it take Google to finally pull the plug?



    So Google is losing money on Android? Wouldn't they have included that in their financial report?
  • Reply 14 of 46
    cmvsmcmvsm Posts: 204member
    If you can't innovate to make incremental income, might as well buy others innovations to do so.
  • Reply 15 of 46
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by AbsoluteDesignz View Post


    Oracle is less of a threat than people think



    You couldn't possibly know that.



    Oracle's lawsuit has the potential to totally eviscerate Android. Now, no one knows how it turns out, but the potential to have the entire core of the OS ripped out is clearly a major threat.
  • Reply 16 of 46
    Quote:
    Originally Posted by DrDoppio View Post


    So Google is losing money on Android? Wouldn't they have included that in their financial report?



    Actually it was. The money coming from mobile ads was minimal and actually included iOS as well. They chose not to break it out because they couldn't brag about it. Kind of like when Apple would talk about the Apple TV. Litigation is costing them real money but their strategy is to steal IP and give it away under the cover of open source.



    Its like someone deciding to use your property to build a house on without your permission.

    Then they rent it out for a profit.
  • Reply 17 of 46
    tbelltbell Posts: 3,146member
    Most experts think Oracle is the biggest threat. Oracle has emails that admit to the advocate the infringement of Java. Oracle will likely get a significant payout (perhaps less then Oracle is asking for). More importantly the Judge (the same one who ordered an injunction against Psystar) has suggested he will grant an injunction if Oracle wins.



    At that point, Google will have to engage in a significant redesign of its OS, which it certainly can do. The problem is without the Java support, the Android applications aren't going to work anymore.



    Android manufacturers are paying Microsoft, paying their lawyers, might soon have to pay Oracle when Oracle moves on to them for contributory infringement lawsuits, and they still have to worry about Apple. This is all for a OS that was deemed free.



    On top of that Google isn't making money on Android. When you consider all the patents Google has bought and the purchase of Motorola to try and defend Android, it is losing money.







    Quote:
    Originally Posted by AbsoluteDesignz View Post


    Probably.



    Oracle is less of a threat than people think but we will see how that pans out.



  • Reply 18 of 46
    conradjoeconradjoe Posts: 1,887member
    Quote:
    Originally Posted by Aizmov View Post


    Why can't Apple do the same? As much as I hate Android it is not going away so better for Apple to profit out of it instead.



    Apple is running scared. They know that Andorid will be the new Windows, if it gains traction. Their strategy was to prevent that at all costs. Litigation is expensive - and so far, Apple has gotten only very limited relief. A tablet here and there has been delayed in the market, not much else.



    Android is already selling at twice the rate of iOS. Apple's window of opportunity with its current litigation strategy is fast closing. They might switch horses in the middle of the stream, but given that Apple has so much cash and so many lawyers, they might keep up their Sue Sue Sue strategy.



    At any rate, the lawyers bills don't cost Apple much, given their wealth. But unless they start to get some better results, Apple's strategy is hardly thermonuclear war. More like lobbing hand grenades into some remote outpost.
  • Reply 19 of 46
    tbelltbell Posts: 3,146member
    There are two things to think about when considering WP7. First, Microsoft is rumored to charge anywhere from $5 to $10 per handset license. Second, Microsoft indemnifies users against IP lawsuits.



    If eventually the cost of being on Android exceeds the cost of going Windows Mobile, hardware manufacturers will seek to jump ship. I think the cost is probably already higher, and Microsoft is making more money then Google from Android. Manufacturers are concerned about WP7 not selling, the invested marketing in Android, and the relatively small apps marketshare of WP7.





    Quote:
    Originally Posted by Suddenly Newton View Post


    It's hard to say. Think of it this way: if you're a handset maker and you don't have your own phone OS (and the infrastructure needed to keep it current), then you have to use someone else's. Android doesn't have to be free (as in free beer) to be viable for OEMs, it just needs to be competitive in terms of benefit-to-cost. Even though patent licensing means that the cost isn't zero (it was never zero to begin with), it's still a good choice for OEMs because Microsoft hasn't gotten much traction with WP7. Other phone OSes aren't being licensed (QNX, webOS, etc.) The alternative is for a handset maker to go back to Linux, fork it, and write their own "touch" libraries and UI on top of that. You'd think HTC and/or Samsung have the resources to do that (HTC Sense, TouchWiz shows they aren't totally dependent on Google), but then they'd be vastly behind the curve on building an App Store business that could compete with iOS and Android. So again, it's better for them to use either Android or WP7. It won't be free, but at least if Android cost enough, WP7 might start to look like a credible alternative.



  • Reply 20 of 46
    conradjoeconradjoe Posts: 1,887member
    Quote:
    Originally Posted by Steven N. View Post




    How many billion in losses will it take Google to finally pull the plug?



    When they start losing money on Android, they will need to face that decision. As of now, you may as well ask the same question about Apple and the iPhone.
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