Microsoft Took $5 For Every HTC Android Phone

Microsoft may be spending enormous amount of money and development effort on Windows Phone 7, but for now, it’s making more money off of Android than it is from Windows Phone 7 and Microsoft gets five times as much money from Android than it does from Windows Phone 7, because of a settlement in an intellectual property infringement case against HTC. The terms of the settlement call for HTC to pay $5 to Microsoft for every Android device HTC sells and HTC has sold 30 million Android smartphones, and so Microsoft has taken in $150 million so far as a result of the suit…………


Microsoft makes more money from Android’s success than they do the success of their own platform. A lot more. You had to guess that in a world of an ineffective patent system, someone somewhere would try to bank off of Android’s fast-growing success. Microsoft gets at least $5 for the sale of every HTC phone due to patent infringement settlements that were agreed upon in courts. Doing some quick math, one analyst took the amount of Android devices he estimates HTC’s sold to date – 30 million – and came up with $150 million. He did the same with Microsoft, taking their 2 million units sold to date and multiplying that by $15, the cost for OEMs to use Windows Phone 7. That came out to be just $30 million. And that’s just HTC alone. Microsoft is looking to get the same break from other Android manufacturers to get anywhere between $7.50 and $12.50 per license. It’s amazing and does well to exploit the problems with today’s patent system. All you need to do is stake your claim to fame on a certain technology and wait until someone hits homerun on it.


The report by Horace Dediu at Asymco says the money is part of a patent settlement:

Microsoft gets $5 for every HTC phone running Android, according to Citi analyst Walter Pritchard, who released a big report on Microsoft this morning.

Microsoft is getting that money thanks to a patent settlement with HTC over intellectual property infringement.

Microsoft is suing other Android phone makers, and it’s looking for $7.50 to $12.50 per device, says Pritchard.

Florian Mueller, who tracks patents and other intellectual property issues at his FOSS Patents blog, provides more details via Twitter:

It wasn’t even a settlement: there was never a formal suit to settle. It was a license deal prior to any litigation.

Have other handset makers signed similar deals?

It’s possible that many have without announcing. HTC is the only specific announcement of its kind. Plus there are broad cross-license agreements they announced with LG, Samsung etc. Those may or may not include Android now.

When Microsoft sits down at the bargaining table with handset makers, this is definitely part of the pitch.


Thanks: (1), (2)

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