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HTC Pays Microsoft $5 Per Android Phone, Says Citi


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#1 +Frank B.

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Posted 27 May 2011 - 14:31

HTC Pays Microsoft $5 Per Android Phone, Says Citi

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.

We knew hardware companies were paying Microsoft, we just didn't know how much. (In October Steve Ballmer said, "Android has a patent fee. It's not like Android's free.")

Pritchard says we can expect more legal activity to pick up around Android in the coming months because "Google appears to have very little IP to defend itself with."

This is good for Microsoft which is about to enter the tablet market and is trying to make a dent in the smartphone market.

Another Citi analyst, Kevin Chiang, believes Android phone makers have 10%-15% operating margins, and Android tablet makers have operating margins of just 2%-3%.

As Microsoft, Oracle (which is suing over Google's use of Java), Apple, and others sue companies using Android, their margins take a whack for every settlement they make.

As the margins are crushed, it makes using a Microsoft-based operating system for tablets and phones much more attractive, argues Pritchard. (Unaddressed by Pritchard is how much Microsoft gets per device and if it's less than or equal to what Android-based devices end up costing.)

Of course, Microsoft has to prove it has a compelling software package to put on tablets.


Source: Business Insider


#2 guru

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Posted 27 May 2011 - 14:52

i wonder how much MS makes off iPhone

#3 Flawed

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Posted 27 May 2011 - 15:00

If you can't beat 'em, sue 'em. Microsoft has hitherto been unable to leverage its desktop OS monopoly advantage, so it needed to find a new way of putting the competition at a disadvantage. For we all know, given its history, that without such tactics, Microsoft can never succeed.

It's sad when a product (WM7) can't stand on its own merits, and can only compete by forcing the "Microsoft Tax" on competitors. But we all know by now, Microsoft wins by hook - OOXML: we're open really!, or by crook - Bing stealing search results from Google, forcing the "Microsoft Tax" on competitors in order to make your product seem more attractive, and corrupting the ISO process to get a proprietary locked down format standardised.

#4 Soldiers33

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Posted 27 May 2011 - 15:00

I dont understand why does microsoft get paid for every android phone? Could someone please explain to me?

#5 LaP

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Posted 27 May 2011 - 15:01

The patent system definately needs an overhaul. The sooner the better.

#6 lalalawawawa

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Posted 27 May 2011 - 15:03

Its not a problem with Microsoft and HTC... Its a problem with patents in general. The US patent system must be overhauled.

#7 BajiRav

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Posted 27 May 2011 - 15:05

If you can't beat 'em, sue 'em. Microsoft has hitherto been unable to leverage its desktop OS monopoly advantage, so it needed to find a new way of putting the competition at a disadvantage. For we all know, given its history, that without such tactics, Microsoft can never succeed.

AFAIK, Microsoft has never sued HTC (but don't quote me on that).

#8 LaP

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Posted 27 May 2011 - 15:08

AFAIK, Microsoft has never sued HTC (but don't quote me on that).


http://www.smh.com.a...00429-ttzo.html

MS did not sue them because they made an agreement.

#9 DJ Woody

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Posted 27 May 2011 - 15:13

Ok granted the patents system needs an overhaul,

To the guy above who said why are they being sued its because the Android OS copied lines of code and intellectual property from companies such as MS and co… Now because Google made Android open source and only charge OEM’s for the use of Google services such as Gmail, google maps etc etc… the companies that own the IP have cannot sue Google directly and thus sue them via proxy with the OEM’s taking the full brunt. You could say its Googles fault (I do) but then again, no one is forcing the OEMs to use the Android platform.

#10 LaP

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Posted 27 May 2011 - 15:16

Ok granted the patents system needs an overhaul,

To the guy above who said why are they being sued its because the Android OS copied lines of code and intellectual property from companies such as MS and co… Now because Google made Android open source and only charge OEM’s for the use of Google services such as Gmail, google maps etc etc… the companies that own the IP have cannot sue Google directly and thus sue them via proxy with the OEM’s taking the full brunt. You could say its Googles fault (I do) but then again, no one is forcing the OEMs to use the Android platform.


Actually MS and HTC did not disclose which patents was covered by the agreement.

#11 Flawed

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Posted 27 May 2011 - 15:16

AFAIK, Microsoft has never sued HTC (but don't quote me on that).

Yep it did. But then it settled with the usual NDA so HTC can't discuss how Microsoft is pricing the fees just right so that Android appears more expensive than WM7 (The Microsoft Tax). These are dirty tactics not intended to protect IP, but to disadvantage the competition through patent trolling. This is how big business maintains its hegemony these days, not through superior products or innovation, but through the application of Government issued monopolies (patents).

#12 DukeEsquire

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Posted 27 May 2011 - 15:18

Why is everyone taking HTC's side? We don't even know what HTC did because the settlement is not public. For all we know, HTC stole something from Microsoft.

If they settled, HTC probably knew they were going to lose because they did something wrong.

Yep it did. But then it settled with the usual NDA so HTC can't discuss how Microsoft is pricing the fees just right so that Android appears more expensive than WM7 (The Microsoft Tax). These are dirty tactics not intended to protect IP, but to disadvantage the competition through patent trolling. This is how big business maintains its hegemony these days, not through superior products or innovation, but through the application of Government issued monopolies (patents).


Patents inherently disadvantage competition. That is the purpose of a patent. It says, "I came up with it first so you can't use."

Duh.

#13 roadwarrior

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Posted 27 May 2011 - 15:24

Another point to consider: since we don't know the specifics of which patents HTC is paying Microsoft to use, they could very well be totally unrelated to Android itself and related to other functions of the phone (such as using FAT32 for the SD card, or something to do with how the touchscreen or certain buttons are handled). Remember that HTC has a long history of making Windows Mobile based phones, so they could very well be using technology in their Android phones that they were only originally licensed to use with Windows Mobile, thus requiring the new license.

#14 mdtaUK

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Posted 27 May 2011 - 15:24

Microsoft believes Android makes use of ideas and technologies (patents) which Microsoft owns, and rather than have to fight a legal case, they agree to settle and pay Microsoft a fee per device, so they can make use of these technologies with Microsoft's blessing and legal protections.

Google have a history of skirting close to the wind with their use of patents, and then offer no protection to their partners and third party developers.

#15 LaP

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Posted 27 May 2011 - 15:30

Why is everyone taking HTC's side? We don't even know what HTC did because the settlement is not public. For all we know, HTC stole something from Microsoft.

If they settled, HTC probably knew they were going to lose because they did something wrong.



Patents inherently disadvantage competition. That is the purpose of a patent. It says, "I came up with it first so you can't use."

Duh.


We don't really know. But the patent system is so ****** these days that you can lose without doing anything morally wrong.

The patent system was at first created to protect creativity and inventive work. It's role today is the complete opposite. Patent trolls redefined the patent system we know today.



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