Citi: Microsoft gets $5 per HTC Android handset thanks to settlement

Android is free? Not if you ask the currently fourth-place player in the mobile market: Microsoft. Microsoft chief Steve Ballmer hinted at this notion last October, stating at Android had "patent fees." Yes, just as Oracle is currently attempting to do in their patent infringement lawsuits against Google, Microsoft has already had success in cashing in a settlement with a prominent Android (and Windows Phone 7) handset manufacturer - HTC.

According to a report by Citi analyst Walter Pritchard (via BusinessInsider), HTC pays Microsoft $5 per Android handset thanks to a patent settlement reached with HTC back in April 2010. HTC's not the only manufacturer targeted, as Microsoft is going after other Android manufacturers and demanding $7.50 to $12.50 per device.

The report also states that Android handset manufacturers have roughly 10% to 15% operating margins, with riskier figures for Android tablet makers at 2% to 3%. Android may have a healthy presence in the mobile phone market, but the tablets are a distant second to Apple's iPads. As Microsoft, Oracle, and Apple chip away at Google over patent infringement claims, any settlements will chip away at the already paltry operating margins for Android tablets.

As a result, Microsoft stands to gain the most from any patent litigation, as they work towards improving Windows Phone 7's presence with the recent "Mango" update and their plans to adapt the next version of Windows for tablets.

Thanks Mephistopheles for the tip in the forums!

Image Credit: The CBI @ Flickr

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There is a simple solution to this - Only buy Android devices from companies who refuse to pay Microsoft's protection money (Microsoft Tax). That includes Barnes and Noble, and Motorola.

If you buy HTC, you are effectively funding Microsoft.

Flawed said,
There is a simple solution to this - Only buy Android devices from companies who refuse to pay Microsoft's protection money (Microsoft Tax). That includes Barnes and Noble, and Motorola.

If you buy HTC, you are effectively funding Microsoft.


As far as I am concerned, **** Google and those OEMs that make hardware for Android.

Seeing as the licencing deal is just between HTC and Microsoft, i would have assumed the stuff infringing patents must have been part of HTC's additions rather than android itself. If not, i'm a little confused as to why microsoft has not sued google or any other the other android manufactures over the same stuff? o.o

Bag said,
Seeing as the licencing deal is just between HTC and Microsoft, i would have assumed the stuff infringing patents must have been part of HTC's additions rather than android itself. If not, i'm a little confused as to why microsoft has not sued google or any other the other android manufactures over the same stuff? o.o

Divide and conquer. Smaller companies also make easier targets and are more likely to settle. It also seems apparent that the lawsuit campaign is designed to force OEM's to produce WM7 devices when they wouldn't have normally.

Microsoft could sue Google for the same infringements on the Nexus One, but chooses not to. If you think this is about protecting IP, think again.

I heard GM uses round tires that Ford introduced first on motor carriages early 19th century, where is the settlement money?

Then I also heard that Ford stole the idea of wheels off a maker of Horse Drawn Carriages named "Concord Buggy" from the 1500's so they are suing now...

Then i also heard that "Concord Buggy" stole the idea of wheels from cavemen from around 5000 BC and now they are now suing...

My great great great great great great great great great great great great great great great great great greatgreat great great great great great great great greatgreat great great great great great great great greatgreat great great great great great great great greatgreat great great great great great great great great grandfather helped pioneer that technology so i think i should get $5 per tire ever made.

When OEMs license Windows Phone 7, the OEMs transfer any responsibility of patent infringement to Microsoft.

Google doesn't provide the same responsibility so how is any of this Microsoft's fault?

day2die said,
When OEMs license Windows Phone 7, the OEMs transfer any responsibility of patent infringement to Microsoft.

Google doesn't provide the same responsibility so how is any of this Microsoft's fault?

+1

And this is why Microsoft has paid out MASSIVE amounts of money for usage and licensing, without complaining or trying to cheat anyone. They started doing this going back to Win 3.1 and have stepped up what they license for their users and developers to an impressive level when you look at Windows 7 and WP7 - where users and developers can freely and easily use a large number of codecs and tons of other technologies that Microsoft pays a lot of money for the users and developers and OEMs to not have to worry about, and can just use them and they 'just work'.

day2die said,
When OEMs license Windows Phone 7, the OEMs transfer any responsibility of patent infringement to Microsoft.

Google doesn't provide the same responsibility so how is any of this Microsoft's fault?


Good point.

No surprise here. I figured Microsoft was already collecting some money from Android and iOS due to their inclusion of ActiveSync.

Behind the scenes there's all kinds of licensing deals going on. When you buy a product there's no telling how the money is flowing.

Exactly PotatoJ.....MS can't beat Android so they will leech as much as they can from it....no big surprises there.

Baked said,
Exactly PotatoJ.....MS can't beat Android so they will leech as much as they can from it....no big surprises there.

who said they cant beat them?
If your refering to their 8ish month old windows phone OS then that is kind of ignorant of the fact that they just entered into the smartphone market...The race is still on, and they have every possible ability to beat them.
And for tablets, well MS will enter that soon enough.

Baked said,
Exactly PotatoJ.....MS can't beat Android so they will leech as much as they can from it....no big surprises there.

Yes, because Microsoft has absolutely no history whatsoever of completely marginalizing open-source operating systems.

Remember, the 'sketchy' behavior of the 90s was competing with IBM and Apple, not Linux. Never Linux. Ever. At no time in two decades has Microsoft ever actually felt threatened in the mindshare space by Linux.

Even open source projects that have done well against Microsoft did so without anyone knowing or caring that they were open source, because they had big, recognizable, corporate names behind them.

so you are suggesting MS looks the other way when Android is infringing their copyrights? I would says its a new low for Google to blantly take MS copyrighted material and use it without paying up and passing the buck down to HTC. if google comes up with all original innovation in android, no one would have to pay anyone anything.

d4diesel said,
so you are suggesting MS looks the other way when Android is infringing their copyrights? I would says its a new low for Google to blantly take MS copyrighted material and use it without paying up and passing the buck down to HTC. if google comes up with all original innovation in android, no one would have to pay anyone anything.

Copyright infringement and patent infringement are two very different things. Software patents have a way of being... incredibly vague and exceedingly unfair, stifling innovation. The whole software patent system needs to be reformed, however the bottom line is Microsoft has used patents as almost hostage situations for decades now. I wouldn't be surprised if this was another case of patent abuse by Microsoft.

OuchOfDeath said,

Copyright infringement and patent infringement are two very different things. Software patents have a way of being... incredibly vague and exceedingly unfair, stifling innovation. The whole software patent system needs to be reformed, however the bottom line is Microsoft has used patents as almost hostage situations for decades now. I wouldn't be surprised if this was another case of patent abuse by Microsoft.

You mean to say that Microsoft should give away it's patents for free? . This is completly fair; other companies licence each other's patents all the time.
Microsoft is a big innovator in the OS,enterprise space so should it surprise you that HTC uses some MS patented tech in their products?

OuchOfDeath said,

Copyright infringement and patent infringement are two very different things. Software patents have a way of being... incredibly vague and exceedingly unfair, stifling innovation. The whole software patent system needs to be reformed, however the bottom line is Microsoft has used patents as almost hostage situations for decades now. I wouldn't be surprised if this was another case of patent abuse by Microsoft.

Yep, and students of this history can directly point their fingers to two companies that created this mess: Xerox, Apple.

The 1980s Xerox rulings and pushing of the definitions by Apple going back to the 80s are the reasons behind the mess we face today. The concept of certain types of software patents did NOT exist prior to Xerox and Apple rulings that shoved them in new directions covering things they were NEVER intended to cover, some of which were so far over the line that in 1998 they were no longer being upheld in some courts.

So thank Apple, for pressing the issue mainly, as they are part of the reason Xerox pushed for the new rulings on the changes they introduced to software patents.

I love how people see this as wrong, and have no realization of the history of this crap. As for Microsoft, it wasn't until the early 90s after the Xerox and Apple rulings that they even started applying for patents on a lot of their work that had previously been outside the scope of patent laws, and they did this in a very 'defensive' nature, as the Xerox and Apple rulings left them wide open.

(This is simple history and you can find timelines of this in both the legal and technical world.)

As for Linux and Microsoft...
Microsoft paid BIG money to gain usage rights to the various base internet and networking technologies to incorporate them into Windows, and nobody complained that they had to do this, but when the reverse happens and other companies snag and start using Microsoft technologies, everyone thinks it is wrong for Microsoft to demand the same compensations. (And this is not about Microsoft paying SCO, they have been paying their fair share for use of technologies going back to the late 80s and early 90s, and even for crap that is now free to anyone.)

It would be different if Microsoft wasn't willing to pay their fair share, and have done so over and over again without question.

PotatoJ said,
This is terrible ... what a new low. Microsoft's strategy is fairly clear. If you can't beat them, leech them!

LOL As much I hate that MS is making a mockery of technology innovation, I am happy that Google and their minions are getting ****ed in one way or the other.

I just cant wait to see in the system information in new android builds
Portions Copyright Microsoft Corporation BTW Hello from Redmond

Makes sense, actually. All Linux does is copy, copy copy. Everything you see on Linux is a direct "innovation" from Microsoft and Apple, whether it be desktop Linux (Kubuntu to Windows, Ubuntu to Mac and Windows, GNOME 3 to Mac) or Linux on phones, such as Android, which rips off some features from iOS, despite it actually being an OK mobile OS. Sure, Open-Source ideologists will argue that ideas should be open, but society won't advance technologically if we have untalented and uninnovative coders working on Linux projects to copy everyone else, and then hide behind that whole "well it's free, so we don't make a dime on it anyway" mantra. I remember Microsoft stating that Linux violates something around 500 of its patents, and Apple has said something about their patents and Linux's infringement too.
Advice to Linux software: it'll only be a contender when skilled, actually innovative coders get to work on it, rather than the software hippies who you'd expect to see at a Woodstock event. For now, though, the real market belongs to Microsoft and Apple, with a little left for Google, who actually don't make Jokeware just for the purpose of "liberating" the software world. Gimme a break.

PlogCF said,
Makes sense, actually. All Linux does is copy, copy copy. Everything you see on
Advice to Linux software: it'll only be a contender when skilled, actually innovative coders get to work on it, rather than the software hippies who you'd expect to see at a Woodstock event. For now, though, the real market belongs to Microsoft and Apple, with a little left for Google, who actually don't make Jokeware just for the purpose of "liberating" the software world. Gimme a break.

So you think Android was written by some random programmers who live in their moms' basement? It was written by Google's programmers, designers, artists. I'm pretty sure Google has the money to hire competent employees, as can be seen by the fact that Android is actually taking over the iPhone in market share.

Android is Linux by the way. It's the Linux kernel with a different software stack compared to Linux desktop operating systems. It's not surprising the Linux kernel was used, seeing as it's arguably the best kernel in existence for many years now. What? What's that? Open source created the best kernel in existence? I think your argument fell to pieces. Take your FUD somewhere else.

OuchOfDeath said,

It's not surprising the Linux kernel was used, seeing as it's arguably the best kernel in existence for many years now. What? What's that? Open source created the best kernel in existence? I think your argument fell to pieces. Take your FUD somewhere else.

Um, declaring something in your opinion and then saying that my argument "fell to pieces" because you said something is pure ignorance. It's like saying "you're wrong because I said so" without giving any logic to your argument. Fact is, the Linux kernel pretty much sucks (yeah, I said it) when it comes to anything, especially stability. I would know, I do use a Linux-based operating system, even though I am a Windows guy. Now, I'm not saying that it's terrible. I still have a small appreciation for Linux as an operating system. I'm just saying that I wish that there were better people working on it with more innovative thinking. It does have some potential. I just think that these Open-Source guys are not helping it, that's all.

PlogCF said,

Um, declaring something in your opinion and then saying that my argument "fell to pieces" because you said something is pure ignorance. It's like saying "you're wrong because I said so" without giving any logic to your argument. Fact is, the Linux kernel pretty much sucks (yeah, I said it) when it comes to anything, especially stability. I would know, I do use a Linux-based operating system, even though I am a Windows guy. Now, I'm not saying that it's terrible. I still have a small appreciation for Linux as an operating system. I'm just saying that I wish that there were better people working on it with more innovative thinking. It does have some potential. I just think that these Open-Source guys are not helping it, that's all.

The Linux kernel sucks, especially when it comes to stability? Are you out of your mind? What do you think the world's biggest supercomputers run? It's not Windows or OS X. Here's a source for you: http://en.wikipedia.org/wiki/F..._top_500_supercomputers.svg

What do you think every Mobile operating system runs? It's Linux. Palm's WebOS runs Linux. MeeGo runs Linux. Android as already mentioned runs Linux.

You have no idea what you're talking about. Linux is the most scalable and advanced kernel in existence (hence its use everywhere from supercomputers to tiny phone devices), and when it comes to stability it's definitely at the top with a few other Unix-like operating systems. Again, take your FUD elsewhere.

OuchOfDeath said,
...

When I'm talking about stability, I really mean desktop Linux. Come on, you know that in order to get Linux to run really well, it has to be heavily modified (like what Google did with Android, for example). Even in that source of yours (traced back to the original article), I've found that they have to use heavily modified versions of Linux. Besides, if you look at the graph, UNIX and Linux have always been the primary OSes in supercomputers. Recently, however, there has been a rise in Windows in use for supercomputers, as shown in your graph. That's okay, but what I'm saying here is that desktop Linux is quite unstable. I cannot tell you how many times my Ubuntu computer has random freezes that completely halt the system, or a portion of the screen loses "consciousness." I've never had any instability problems with my Windows 7 machine (even if a standalone application crashes, Windows has a nice way of managing it), and I can say the same for Mac OS X. I sadly cannot say the same for Linux, or Ubuntu in my case. Maybe you have a better Linux alternative in mind? I'd be interested to know.

Oh, and I'm not spreading FUD, I'm just a general Windows and Linux user who has some complaints about it, and is somewhat disappointed. I'm not looking to start a flame war today, so I'd advise you to respond in a non-emotional way. Okay?

PlogCF said,

. Fact is, the Linux kernel pretty much sucks (yeah, I said it) when it comes to anything, especially stability.

... and that is why it's used everywhere. Great logic. Fact is, you're full of sh*t, and are trying to use arguments like "Oh but I have Ubuntu on one hard drive" to state your position as having any validity, when it doesn't.

You were not talking about the desktop. You specifically stated the Linux kernel, and you even said it "sucked", when you had no grounds to make that statement on. I think if the world's biggest supercomputers run Linux, it's a statement saying Linux is the scalable, advanced, and especially the most stable kernel out there. Supercomputers -have- to be stable.

Furthermore, Linux on Android and other devices is not "heavily modified". There are some patches that mainline Linux has not accepted, but the statement that it's been "heavily modified", as if Linux sucks and Google made it better here, is entirely false. Again, spreading FUD. There is no level of neutrality in your comments. You're simply biased as sh*t.

OuchOfDeath said,

... and that is why it's used everywhere. Great logic. Fact is, you're full of sh*t, and are trying to use arguments like "Oh but I have Ubuntu on one hard drive" to state your position as having any validity, when it doesn't.

You were not talking about the desktop. You specifically stated the Linux kernel, and you even said it "sucked", when you had no grounds to make that statement on. I think if the world's biggest supercomputers run Linux, it's a statement saying Linux is the scalable, advanced, and especially the most stable kernel out there. Supercomputers -have- to be stable.

Furthermore, Linux on Android and other devices is not "heavily modified". There are some patches that mainline Linux has not accepted, but the statement that it's been "heavily modified", as if Linux sucks and Google made it better here, is entirely false. Again, spreading FUD. There is no level of neutrality in your comments. You're simply biased as sh*t.


Did you read my following post? I specifically said that it is heavily modified for performance in competing platforms, such as Android. On the standard desktop distribution, where Linux is not modified for performance, it tends to be lacking in functionality. I see that you are too angry, or ignorant, to understand this? Is it really that difficult to conceptualize?

Never mind, I've found that your posts tend to be emotional rather than intellectual. While I give information and factual data to support my claims, you seem to reiterate your point. I'll admit, you vary your reiterations with a few insults sprinkled on, yet your same old point is still there. I simply cannot discuss this topic furthermore with a person who is not willing to use intellect (if any is present?). Have a nice day, I'm done with your unintelligence. I hope that you may be able to bring some facts to your claims as I did, rather than revolve around one debunked point in each of your posts. I guess you'll wind up getting the last word. All I can say is that I expect you to use it unwisely.

PlogCF said,

Did you read my following post? I specifically said that it is heavily modified for performance in competing platforms, such as Android. On the standard desktop distribution, where Linux is not modified for performance, it tends to be lacking in functionality. I see that you are too angry, or ignorant, to understand this? Is it really that difficult to conceptualize?

Never mind, I've found that your posts tend to be emotional rather than intellectual. While I give information and factual data to support my claims, you seem to reiterate your point. I'll admit, you vary your reiterations with a few insults sprinkled on, yet your same old point is still there. I simply cannot discuss this topic furthermore with a person who is not willing to use intellect (if any is present?). Have a nice day, I'm done with your unintelligence. I hope that you may be able to bring some facts to your claims as I did, rather than revolve around one debunked point in each of your posts. I guess you'll wind up getting the last word. All I can say is that I expect you to use it unwisely.


Don't be stupid. I did read your following post. Your post is wrong.

You have not given any data at all. In fact you have made blatantly factually incorrect statements. Not a single link from you, just "Oh Desktop Linux isn't as polished as OS X or Windows 7". That's not a factually correct statement, and it's not even on-topic. We were talking about the Linux Kernel.

Here's a source stating that indeed the Android Linux kernel is not heavily modified, as I have already stated before: http://ranganaths.wordpress.co...id-kernel-and-linux-kernel/

If you have any kernel knowledge you'll recognize that most of those changes don't even change anything in the kernel, just add a bit of functionality for specific hardware. The biggest changes would be some TCP stack changes and modifications in power management. None of these qualify as "Heavily modified". Nothing in that list qualifies as "Heavily modified". The Android Linux kernel is almost the exact same thing as mainline. Your "Heavily modified" statement is simply false, and I have no idea where you pulled it out from. No source for that ridiculous statement either, I bet.

So, Mr. "You provide no sources". Where are your source? Would love to see at least one.

OuchOfDeath said,

So you think Android was written by some random programmers who live in their moms' basement? It was written by Google's programmers, designers, artists. I'm pretty sure Google has the money to hire competent employees, as can be seen by the fact that Android is actually taking over the iPhone in market share.

Android is Linux by the way. It's the Linux kernel with a different software stack compared to Linux desktop operating systems. It's not surprising the Linux kernel was used, seeing as it's arguably the best kernel in existence for many years now. What? What's that? Open source created the best kernel in existence? I think your argument fell to pieces. Take your FUD somewhere else.

Whoa, Whoa...

You need to learn a bit about Android and Google, you have no idea what you are talking about.

1) Google did NOT wirte Linux
2) Google did NOT write Android
3) Google did NOT write Dalvik (The App VJM on Android)

Just like Google did not write Chrome, VP8, WebM, or 100s of other items they put their name on.

Google hasn't even changed any of these products fundamentally, and is why they themselves can't get a grasp of the products and are scrambling to put enough duct tape on projects like Android to remain viable.

If Google TRULY had the engineers, they would have written Android from the ground up and avoid all the issues they are being smacked in the face with today. This is also true of Apple, that is still trying to chop up iOS and duct tape it the base kernel and OS model technologies to fit a pardigm they were NEVER designed for, nor is it flexible enough to go much further with higher end technology concepts.

When companies like Google and Apple are putting more development resources to 'make their OS' fit, instead of expanding its technology, they have a problem, which right now they both do, and Apple is also still hitting these walls with OS X as well that became clear to even their own end users when hybrid video technologies came around, and OS X had to reboot the entire GUI just to flip GPUs - which at the model and kernel levels are still not fixed, and just introduced a new layer of duct tape of logging the users off to even make it work.

These are reasons why companies like Microsoft built their OS technologies from the ground up and intentionally avoided the traditional kernel and *nix OS models as even in 1991 they were seeing walls and duct tape that was already being used on that generation of technology and hardware. Kiddies and even the OSS world would a lot better to stop copying their own aged crap and concepts and build from new models that are extremely extensible, instead of trying to equate generic I/O and parameter based intercommunication as 'extnsible' instead of it being horribly 'limited'.


I don't care about who copies who arguments, as it can be argued back to M theory and Quarks, as all technology is some re-invention of a concept inside or outside the computing world.

thenetavenger said,

"Lots of paragraphs"

1. I know. I never said Google did.
2. Google wrote the Android "Software Stack". Not from the ground up of course, it's obviously a collection of a lot of open-source code as well.
3. Yes aware of this.

I'm not sure what your point here is. There is a lot of reasons to re-use existing code instead of writing it from scratch. The use of Linux as the kernel is an obvious choice. It is often a lot easier to modify existing projects to fit your needs than to write them all from scratch.

What are the reasons Microsoft did that? Because I can't see any reasons. The 9x kernel was of course a hybrid DOS/Windows kernel and was a complete piece of sh*t. The operating system didn't even have multiple user support. It was a complete and utter mess. It was the worst operating system the world has known besides DOS(DOS had limitations due to x86-16 however, keep that in mind), and that's pretty sad.

NT was modelled after UNIX in many respects, implementing many of the features UNIX and UNIX-like operating systems already had for a long time.

Microsoft's operating system has been terribly out of date in every regard for years and years, because they chose to ignore what UNIX had already established as superior, as can be seen by the fact that Microsoft has been playing catch up for most of its existence. Take UAC as a great example. It came out in 2006 with Vista. "UAC" has been in UNIX since its inception in 1969.

While Microsoft has chosen to write their own code, and good on them for trying, it has backfired on them for so long. They even chose to write their own code with their own standards in mind, instead of the tried and true standards of UNIX security and user administration.

I could go on about how badly Microsoft screwed up with 9x, and then with NT on the desktop by defaulting to an admin account. It's been a long road of constant failures, and only now with Vista and 7 are all these terrible flaws being addressed. Better late than never.

OuchOfDeath said,

-insert anti-Windows flame of a Linux fanboy-

Microsoft playing catch up eh? You just mention some underlying features here and there but you fail to see the bigger picture: Linux Desktops are ususuable by the average person. Compile programs? Whut? Command-Line, whut? While Microsoft has been improving on the user side Linux has always been sh** at being user friendly. They need to catch up .

Anooxy said,

Microsoft playing catch up eh? You just mention some underlying features here and there but you fail to see the bigger picture: Linux Desktops are ususuable by the average person. Compile programs? Whut? Command-Line, whut? While Microsoft has been improving on the user side Linux has always been sh** at being user friendly. They need to catch up .


Command line and compiling is entirely unnecessary these days. As for the desktop, yes it has some catching up to do. We weren't talking about the desktop though. We were talking about operating system and kernel design.

It said on WinRumors, that they actually get more per HTC Android device, than for a HTC WP7 Device.

Craziness.

Benjy91 said,
It said on WinRumors, that they actually get more per HTC Android device, than for a HTC WP7 Device.

Craziness.

people were thinking they were licensing every patent individually for a several dollars each. Someone said as high as $40 per device. wth!

Microsoft charges HTC $5 per Android device, and $15 per Windows Phone 7 license. However, because Android devices sell far better than Windows Phone 7, Microsoft makes more money through Android sales.