

Microsoft now paid royalties on 70% of US Android smartphones - eplanit
http://arstechnica.com/microsoft/news/2012/01/microsoft-now-paid-royalties-on-70-of-us-android-smartphones.ars

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gvb
Think about this from a different point of view: the reason Microsoft is
threatening cell phone manufacturers and extracting royalties is because they
are trying to slow down the Android juggernaut enough to get traction with
WP7. Obviously, has not been effective.

I would posit the reason phone manufacturers are _paying_ royalties as opposed
to _cross licensing patents_ is because Microsoft doesn't have enough market
share for HTC, LG, (Google?), etc. to make it worth while for manufacturers to
trade their patents for.

In other words, phone manufacturers see $10 (a guess) per phone payed to
Microsoft today is cheaper _in the big picture_ than licensing WP7 instead of
Android on those phones. In addition, it implies they value their own patents
more than that amount and thus refuse to cross license their own patents to
instead of paying the Microsoft royalty.

The logical conclusion is that phone manufacturers have looked in their
crystal balls and bet strongly against Microsoft. They are betting that, in
five years (a guess), Microsoft will be out of the phone software business and
their patents will be irrelevant because they have either expired or been
worked around.

The phone manufacturers are also remembering the iPhone vs. Windows Mobile /
Windows Phone timeline and remembering how long they were getting buried by
Apple because _Microsoft_ was not able to sell them a credible alternative to
the iPhone. Screw me once, shame on you. Screw me twice, shame on me.

~~~
huxley
Acer, Samsung, LG, ZTE and HTC all make Windows Phone 7 models. That's most of
the big Android licensees right there (Motorola being one of the big holdouts
in both royalties and WP7 phones). Obviously they aren't so pissed that they
won't invest some cash in building WP7 kit.

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emilsedgh
So Microsoft unleashes its lawyers on Android OEM's and there's nothing Google
and all those OEM's could do about it?

Wasnt Google supposed to 'defend' OEM's, specially after Motorola deal?

And, on a totally unrelated note, Microsoft does all the bad practices to gain
profit; and it has an XBox with a camera connected to internet with closed
source software which updates itself, on millions of houses across the globe?
And we're supposed to trust them because...?

~~~
shin_lao
Maybe Microsoft's requests are legitimate? Maybe the OEM really infringe on
patents? Maybe Microsoft provide support for the technology in exchange of
money?

We have little or no information, let's just not jump to conclusions.

~~~
vidarh
Thankfully the veil is likely to start getting lifted with the Barnes and
Noble lawsuit and anti-trust complaint.

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av500
Most of them pay nothing at all. Samsung, HTC and LG made a deal where they
agreed to make a few Win7 phones in exchange for patent freedom from M$. Part
of the deal is to still claim that they are paying royalties in order to
uphold this FUD. M$ hopes that this way they will make some money via Win7
phones.

Look at B&N, they are fighting M$ in court because they cannot make a deal
like the phone people did.

~~~
ge0rg
Can you please provide a source for your information?

"HTC Pays Microsoft $5 Per Android Phone, Says Citi":
[http://www.businessinsider.com/htc-pays-microsoft-5-per-
andr...](http://www.businessinsider.com/htc-pays-microsoft-5-per-android-
phone-2011-5)

~~~
av500
There is no official source on that which I could quote. But it is what I have
been told by people involved.

There is another aspect, a lump sum of 5-15$ per unit might look like a lot of
money for M$, but over a 2y period thats not much. All that such a deal would
do is to make the phone a bit more expensive, same as if another earthquake
hit and some parts like CPUs or RAM became more costly. Carriers would easily
swallow that for subsidized phones. All the search revenue, App store revenue
etc. would still go to others like Google. And most important, the customer
would be lost to M$ - If M$ wants to take a significant market share in
mobile, collecting royalties on Android is not the way.

~~~
ge0rg
I do not know the licensing fee involved with WP7, but demanding higher
royalties on Android devices might be a way to push vendors into switching.

Also, 5-15$ is significant when comparing it with the manufacturing costs of
the device (the iPhone 4S CPU is estimated at 15$ by iSuppli
([http://www.isuppli.com/Teardowns/MarketWatch/Pages/For-
the-i...](http://www.isuppli.com/Teardowns/MarketWatch/Pages/For-the-
iPhone-4S,-It%E2%80%99s-What%E2%80%99s-on-the-Inside-that-Counts.aspx\))).

~~~
av500
Vendors have to make sure they build phones that they can sell, the phone
being simply $15 cheaper won't do that. Apple sells more 4S than 4 and more 4
than 3GS, so it cannot be that the price is the only decision point

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jroseattle
At first, this really pissed me off -- Microsoft sticking it to everyone with
Android.

But 11 companies with Android products on the market are paying licensing fees
to Microsoft? That's way too many lawyers in agreement for this to something
superficial.

Where the hell is Google in all this? I thought they were going to defend
OEMs? Honestly, I can't say that I'm surprised. Google might be a big force in
the industry, but in old-school software licensing, they're noobs.

------
nextparadigms
It's too bad that even though most of those patents could be invalidated in
Court, these companies fell one by one and started paying Microsoft royalties
for all the claimed infringements.

I'm pretty sure most of the big companies like Samsung and LG didn't even
agree to do this for nothing, though. They most likely got a discount deal for
Windows licenses, or some similar deal. Both of them make Windows laptops.

~~~
fauldsh
I'm interested to know where this certainty that these patents wouldn't hold
up in court comes from.

~~~
abraxasz
Yeah, I second this point. I don't know much about the situation between
Microsoft and Android's OEMs, but to me, it seems like a simple case of "I've
invested money in research, came up with some useful technology that you [the
OEM, that is] are paying to use".

I don't see where the controverse is (other than the more general and complex
debate about what should be free, etc..)

~~~
fauldsh
Consider that Apple own patents for pinch-to-zoom and the use of a gyroscope
to control the rotation of a screen (turn the phone sideways, get landscape
view). Given the thousands of patents all of the big companies own it becomes
very believable that Microsoft would own a bunch of patents that many phones
infringe on and that it would take Microsoft time to even realise it owned
them (a possible reason for the delay in going after phone companies).

Patents that are essential to the phone being popular (can you imagine a
smart-phone without the two above features).

Patents that would force most suppliers to just pay up.

EDIT: Just to confirm, I am agreeing with you, I just figured I'd explain why
I think their claims are likely valid. This is not to say I agree with these
patents being given but I've seen so many comments that seem to assume this is
all a big con that will fall apart at the slightest scrutiny.

------
molmalo
So, if Google makes money with Apple stuff (iPad, iPhone with search, maps,
etc), and Microsoft makes money with Android... Let's close the circle! Let
Apple make money with WP7! (C3 technologies for bing maps could do it...) And
everyone will be happy forever! (Or not).

Seriously, Ballmer should send a really nice corporate gift to Brin, Page and
Schmidt, with a card: "Thanx pals!"

~~~
TallTalesOrTrue
Google not only makes money off of Apple products but pretty much any product
from where one can search. That includes all the android devices as well.
Which makes you wonder why are they pushing android at all. People are used to
using Google so no matter what OS, they are going to use it anyways Why spend
billions of dollars developing and defending it?

~~~
bishnu
Google doesn't just make money off both iOS and Android - they make MUCH MORE
money off iOS than Android, at least twice as much. [1]

But they don't control iOS, so all Android is is a hedge in case Apple tries
to disrupt mobile search somehow. I honestly wonder if there's any tension at
Google between the search team and the mobile team, since at the moment Google
is flogging something directly against the interests of their cash cow
(search).

[1] [http://9to5mac.com/2011/09/21/google-23rds-of-our-mobile-
sea...](http://9to5mac.com/2011/09/21/google-23rds-of-our-mobile-search-comes-
from-apples-ios/)

~~~
brudgers
Microsoft is Google's direct competitor in regards to mobile search...or
search in general for that matter. As for Apple, I don't see them entering
search because search, in general, suffers from the level of curation Apple
tends to association with its brand.

~~~
bishnu
That and software-as-a-service just isn't Apple's business model. They just
want to sell you stuff.

------
kahawe
Could someone enlighten me what all those vendors licensed from Microsoft?

~~~
gvb
No. Seriously. The people that know are bound by nondisclosure agreements that
exclude you (and me). Everybody else is just speculating.

