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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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.

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

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.

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.

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.

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.

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.

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.

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.

Subject Delta said,
Is it too much to expect the staff here to actually post a single positive thing about Android on this site? The amount of pro Microsoft/Apple bias amongst Neowin's staff is nauseating.

100% agree, great post. i still think neowin gets kickbacks or freebies from microsoft. that's why i do not come here much anymore. also this is a crap move my microsoft, im glad i switched to osx 2 months ago. oh yeah and android FTW!

Subject Delta said,
Is it too much to expect the staff here to actually post a single positive thing about Android on this site? The amount of pro Microsoft/Apple bias amongst Neowin's staff is nauseating.

You sure have a point!

I'd also like to see lots more of that!
I'm an iOS user and will stick to it, however, I'd like to read more good news about droid here on Neowin, too!
Even Macrumors has more of them it seems... >_>

GS:mac

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