
Microsoft Earns $2 Billion Per Year From Android Patent Royalties? - jonathansizz
http://www.businessinsider.com/microsoft-earns-2-billion-per-year-from-android-patent-royalties-2013-11
======
tsycho
If these numbers are accurate, then yuck!!! My disgust for software patents
just went up even further.

More seriously, I have a question for those who know more about this...

1\. Are these generic, broad "idea" patents and hence there is nothing
Google/OEMs can really do here to avoid licensing them? If not, why don't they
use an alternative implementation to avoid the conflict?

2\. If the answer to #1 is yes, how does Apple avoid this problem? Are they
also licensing from Microsoft? Or is Apple in some sort of a mutual cross-
licensing agreement here to fight the common enemy Google?

~~~
VladRussian2
>1\. Are these generic, broad "idea" patents and hence there is nothing
Google/OEMs can really do here to avoid licensing them? If not, why don't they
use an alternative implementation to avoid the conflict?

no alternative implementation would help as it is not about some specific
patents, it is more about [litigation] threat that some patents in the vast
portfolio can be found that may be in some sense considered violated.
Basically it is racket called Android Licensing Program - you pay "protection
money" to MS in exchange for it not bothering you.

What interesting here is that Google seems to leave its OEMs to fend for
themselves, thus instead of fighting one Google over 2B/yearly pot (the show
that first row tickets for would sell like for Superball), MS extorts fifty
million here and hundred million there which is much easier and safer.

~~~
thetrb
Do they also get money from Motorola?

~~~
VladRussian2
[http://www.fosspatents.com/2013/04/just-like-one-week-ago-
wh...](http://www.fosspatents.com/2013/04/just-like-one-week-ago-when-
foxconn.html)

"Google's Motorola Mobility, which prefers litigation even though it's a
grossly unsuccessful strategy for Google "

and

[http://www.fosspatents.com/2013/04/setback-for-google-
german...](http://www.fosspatents.com/2013/04/setback-for-google-german-court-
finds.html)

~~~
afsina
fosspatents is an Oracle and MS shill.

------
mtgx
How can a company so shamelessly extract money (through forceful deals, no
doubt) from an _open source_ OS, and get away with it?

Linux companies dodged this bullet for the most part, from both Microsoft and
SCU, but it seems Microsoft "succeeded" this time against Android with their
mostly garbage patents in the same way patent trolls and mass-bittorrent
lawsuits have succeeded so far - by scaring people/companies into paying up,
_without_ having to get into any lawsuit, which is exactly what patent trolls
have been doing for a while.

As soon as B&N was about to invalidate some of their main patents, they
quickly "invested" $300 million into B&N (i.e. they settled), and B&N dropped
the lawsuit. I wish more OEM's would've had the _balls_ to call their bluff.

So EFF - any proposals for stopping _corporate_ patent trolls like Microsoft,
Rockstar Consortium and Intellectual Ventures, yet?

~~~
ChrisAntaki
My guess is that the device manufacturers see some legitimacy to Microsoft's
claims, or at least fear a judge would. Perhaps if all the manufacturers
banded together, well mainly Samsung, they could fight it. But if that would
have been profitable, I'd assume it would have happened by now.

~~~
marcosdumay
More realistic, device manufacturers understand that seeing a judge long
enough to know his opinion (whatever it is) is more expensive than paying the
protection racket.

------
Maascamp
Why is everyone taking these numbers as fact when neither the article nor
analyst offer anything to back up these claims?

The people submitting and upvoting stories like this are just as responsible
for the shoddy state of tech journalism as these bloggers are.

------
sker
I always thought HTC and Samsung were exempt from these royalties by releasing
their own Windows Phones. That's why Samsung doesn't care at all about their
WP offerings.

Samsung, HTC, Apple and Nokia should account for over 50% of the global
market. If my assumptions are correct, are the rest of the smaller players
able to pay that much money on royalties alone?

I'll like to see some numbers. The article is seriously lacking data.

~~~
objclxt
> _I always thought HTC and Samsung were exempt from these royalties by
> releasing their own Windows Phones_

Samsung definitely pay a per-device royalty to Microsoft for Android devices,
the latter even put a press release out about it a few years ago:

[http://www.microsoft.com/en-
us/news/press/2011/sep11/09-28sa...](http://www.microsoft.com/en-
us/news/press/2011/sep11/09-28samsungpr.aspx)

------
nemothekid

       Of that, $2 billion in losses are attributable to the Xbox platform.
    

Wow, I would have never imagined the Xbox division to be in dire straits.

~~~
mtgx
I don't think Microsoft has ever made a profit on Xbox, although I'm sure
they've split up and distributed its losses to all sorts of divisions to hide
that. They're about to do the same with Bing, too, now.

~~~
leokun
So why do they make the xbox? Why are they making another one?

~~~
hackinthebochs
They're still fighting for the supposed set-top-box future that has been
predicted for the last 15 years. Maybe this generation....

------
jonathansizz
Earn (verb): 'gain or incur deservedly in return for one's behavior or
achievements.'

So why change the article's title, HN?

~~~
phaemon
It's actually the title in the <title>, even though it's not the title of the
article. I agree that "earns" is a poor choice of words...

------
AJ007
How much money is Ubuntu and Firefox budgeting for patent licenses on their
mobile OS?

~~~
bdcravens
None, as neither will be producing hardware it looks like. Microsoft is going
after handset makers, not Google.

------
Oletros
I like when some staimate from some analyst without any real figure is stated
as a fact

------
Touche
The mobile phone business is essentially a cartel where only very big players
are able to enter the market. Why is this allowed to exist? I couldn't start
my own company and compete in this space.

------
IBM
This might be more than what Google earns from Android.

~~~
bdcravens
Possibly more than Microsoft earns from Windows Phone.

------
zmmmmm
Hopefully - and I really hope this - most of these patents are stupid stuff
from the early days of graphical operating systems and are ready to expire in
the next few years (given a 20 year lifespan for most patents).

~~~
marcosdumay
> given a 20 year lifespan for most patents

From what I've read, in the US a patent is valid until 20 years after it is
granted, retroactive to the date that it's filled. That can be a 40 years
interval, or more, if the USPTO don't do it's job well (and I know of patents
that did go over 30 years).

~~~
AnthonyMouse
The US patent term is 20 years from filing as of June 8, 1995. Previous to
that it worked as you describe, with a term of 17 years from issuance.

The trouble, of course, is that we're still in that window. A patent filed in
1994 but not issued for many years thereafter may still be in effect.

------
shmerl
A clear demonstration that patent racket is a lucrative "business".

------
AshleysBrain
With software, is it out of the question to re-engineer the code so it no
longer needs licensing? Why hasn't Android already done that?

~~~
w4
The problem is, frequently, the patents aren't on something you can engineer
around; they're on a very broad idea and not on any specific implementation,
e.g. pull to refresh. If you want to implement an interface that pulls down to
refresh then you're technically infringing on Twitter's patent on it (though
they have chosen not to enforce it). My understanding is there's no good way
to engineer around it if you want the interface to pull and refresh.

Granted, you can get around that one with a button that refreshes, but what if
the patents is, say, on "operating system provided tabs"? Or on "plotting
search results on a map"? Or on "communicating multi-part messages"? Now you
have a problem, and you're going to have to pay licensing fees since you need
those things just to create your mobile OS.

The other problem has less to do with the patents themselves and more to do
with the legal system surrounding them: it's incredibly expensive and quite
risky to litigate software patent disputes. You're dealing with a court system
that doesn't necessarily fully understand technical matters, leaving the
outcome of litigating ambiguous even in the best of cases (and keep in mind
that a loss could potentially end your entire product, since the courts could
order that you must pay an extremely onerous licensing fee or cease
infringing, either of which probably means closing up shop), and the cost of
litigation is enormous. It's usually wiser just to settle for an acceptable
licensing agreement than it is to try to engineer around the problem and fight
the ensuing lawsuit by asserting that your solution is not subject to the
patent.

------
leeoniya
does anyone know which patents they're asserting? FAT?

~~~
rbanffy
Barnes and Noble tried to make the list public. They got, IIRC, a billion
dollars and a "partnership" (mostly the money) in exchange for shutting up.

AFAIK, the list is still secret.

~~~
killme2
That's not true and has turned into something of an urban legend with
uninformed people repeating the claim. Here is the list
[http://www.networkworld.com/news/2011/070611-microsoft-
andro...](http://www.networkworld.com/news/2011/070611-microsoft-
android.html?page=2)

~~~
throwawaykf02
Also, by my dangerously semi-informed understanding, B&N's defense looked
really weak (see previous comment on same topic:
[https://news.ycombinator.com/item?id=6540902](https://news.ycombinator.com/item?id=6540902)).
I'd still like a real attorney to weigh in on my opinion, though.

So I really don't buy the "B&N scared Microsoft into bribing it" story. To me,
it seems more like a "B&N tried a Hail Mary shot at getting an antitrust thing
going against Microsoft, and when that failed miserably, they sold a cheap
stake in their ebook business" story. Consider that ebook content is something
Microsoft's ecosystem didn't (and _still_ does not) have compared to Apple,
Google and Amazon's ecosystems. Consider also that this ebook content comes
without the lawsuits and publisher-wrangling the others had to go through.

So, $300M for a quick entry into a market where its competitors are incumbents
seems like Microsoft got a pretty decent deal, and I think that patent lawsuit
provided leverage.

------
adrianlmm
You gotta be kidding me.

------
zmonkeyz
Dre Day only made Easy's pay day...

------
corresation
...claims analyst, with absolutely nothing backing up their claim. The
headline appears as if Microsoft accountants stated this as a fact, when in
reality this is someone essentially reading tea leaves.

Further it's worth noting that the division that these Android royalties are
attributed to also garners all other patent licensing royalties of any sort
(e.g. FAT), as well as licensing charges such as ActiveSync licensing (ergo,
every iPhone, among others).

~~~
iamshs
Exactly. Rick Sherlund has a history of saying that Microsoft should be
divided up, and Xbox should definitely be spun off [1, 2, 3]. He even said
Samsung should take over Xbox division [4].

Even if MS earns $1 Billion from patents that exclude "legitimate" licensing,
I think that would be a big number and definitely should be looked into.

[1] - [http://www.geekwire.com/2013/sherlund-microsoft-should-
consi...](http://www.geekwire.com/2013/sherlund-microsoft-should-consider-
selling-xbox-bing-businesses/)

[2] -
[http://money.cnn.com/2013/06/03/technology/enterprise/micros...](http://money.cnn.com/2013/06/03/technology/enterprise/microsoft-
breakup/)

[3] -
[http://www.gamesindustry.biz/articles/2013-06-03-microsoft-w...](http://www.gamesindustry.biz/articles/2013-06-03-microsoft-
would-exit-the-games-business-before-selling-xbox-division)

[4] - [http://www.examiner.com/article/sherlund-microsoft-needs-
to-...](http://www.examiner.com/article/sherlund-microsoft-needs-to-deal-xbox-
one-department-to-samsung)

~~~
ngoel36
Microsoft's divisions (most notably Xbox) have always had a huge dilemma: Do
we act in a way that's best for our division, or do we maximize value for
MSFT. From my time at Xbox, I can say with certainty that the implied actions
for each choice are often not the same.

~~~
amitagrawal
I think (and a lot of other would agree with me on this) that the Xbox
division within Microsoft is the most customer-centric of any company in the
entire world.

The people at Xbox are die hard gamers who really want to help you solve your
problem whatever it might be. I don't know if spinning off one of the best
divisions would be such a smart division specially when it is already
profitable, unlike Bing.

~~~
ngoel36
But would it be more profitable on its own if it didn't have to conform to
things like...Windows Phone integration (only)....Live ID signin, etc.?

------
padobson
I'm not surprised the XBox division is bleeding so much cash. Microsoft should
never have gotten into the hardware business in the first place. Every time
they release a new piece of hardware is cause for a face-palm.

15 years ago, when no console maker had a viable strategy for going online, MS
should have built a cross platform solution that made online gaming possible
for every console. Does that sound familiar? A cross-platform solution for a
number of competing hardware makers?

This division would probably be a huge part of Microsoft's business if they
had pulled it off. Just think of the leveraging possibilities if every gamer
over the age of 25 had an XBox live account, instead of the much smaller
subset of gamers over 25 who also owned a Microsoft console.

I think they're back on the right track with Windows phone, but Google already
beat them to the cross-platform solution.

