Microsoft could earn $444 million a year from Android Licenses

Microsoft has been on the offensive when it comes to protecting its patents. Likewise, it should be, if you own the patent, it is in your best interest to protect your intellectual property.

Microsoft recently announced that they had inked a licensing deal with Samsung over their Android products. This is only one of many such deals that Microsoft has secured in the past few months with many of the key Android vendors.  

Knowing that Microsoft is landing these deals and earning royalties from every sale of an Android device makes you begin to wonder, how much is Microsoft earning from these deals? According to Business Insider, they make nearly a half a billion dollars annually. The amount estimated is 444 million USD which sounds like a massive amount of cash, but when you consider the company is estimated to bring in 75 billion USD in 2012, the amount is a drop in the bucket for Microsoft.

These patents have finally pushed Google over the edge which resulted in some corporate mudslinging yesterday between Microsoft and Google. The two exchanged words over the new patent deals with Google saying that Microsoft is extorting its partners and Microsoft called Google a bunch of cry babies.

Whatever way you want to look at it, Microsoft has now found a way to make some substantial cash off of one of its competitor’s products. Patents are a hot topic in this country and here is a perfect example of how having a strong patent portfolio can make your competitors lives a living hell.

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why does google care? microsoft is going after the hardware vendors and only the big ones. they aren't even suing them yet so if the vendors are ok with it then google shouldn't care.

capr said,
why does google care? microsoft is going after the hardware vendors and only the big ones. they aren't even suing them yet so if the vendors are ok with it then google shouldn't care.

Because the added cost defeats any benefit to using Android... Of course this wouldn't be a problem if Google actually supported their OEM's...

Does this money go straight to the Mobile division of Microsoft or is it split up to different departments? It would be nice if it went to their mobile division only. God knows that they can sure use the "profit".

Why Microsoft charges Samsung?
In my opinion, Samsung should charge Microsoft for using it's OS.
Think about it, Samsung's phones are powerhouses, for both their perfomance and features they are the best out there in the market.

Lots of consumers were saying "I wish if Samsung Galaxy S2 had Windows Phone 7 it would be the best phone ever"

I get the idea that Microsoft wants to protect it's patents by charging Samsung.
But I do not get the idea when Samsung's Mobiles are the bestselling in the market and espcially now that they would provide their phones with Windows Phone 7 OS and will also raise Windows Phone 7 reputation.

MariosX said,
Why Microsoft charges Samsung?
In my opinion, Samsung should charge Microsoft for using it's OS.
Think about it, Samsung's phones are powerhouses, for both their perfomance and features they are the best out there in the market.

Lots of consumers were saying "I wish if Samsung Galaxy S2 had Windows Phone 7 it would be the best phone ever"

I get the idea that Microsoft wants to protect it's patents by charging Samsung.
But I do not get the idea when Samsung's Mobiles are the bestselling in the market and espcially now that they would provide their phones with Windows Phone 7 OS and will also raise Windows Phone 7 reputation.

Samsung will not refuse bundling WP7 just because they charged Samsung. That's not how it works in the corporate world. Look at Samsung vs. Apple, they still make their screens after all that jazz.

Does anybody know how much google makes on android? I know they make money from Advertising...I wonder how much they make from that.

Melfster said,
Does anybody know how much google makes on android? I know they make money from Advertising...I wonder how much they make from that.

$0...they make their money from searches and related services.

the OEMs are the ones making money by actually selling Android and they are the ones getting sued.

red hook said,

$0...they make their money from searches and related services.

the OEMs are the ones making money by actually selling Android and they are the ones getting sued.

actually they license out the market and their apps to OEM's I believe.

The estimated $75 billion is revenue. The $444 million is pure profit. The number that should have been used is net income which for Microsoft's fiscal 2011 was $23.15 billion. Still a drop in the bucket though.

Very fair point, although, in the first year Microsoft could charge the expenses to obtain the agreements to the revenue generated by the agreements...nit picking I know.

Tomer2000 said,
The estimated $75 billion is revenue. The $444 million is pure profit. The number that should have been used is net income which for Microsoft's fiscal 2011 was $23.15 billion. Still a drop in the bucket though.

So, rough math, it would have increased their net profits by 2%. That's pretty significant.

If their profit to revenue margin is $23.15 billion to $75 billion, that $444 million in additional profit is the equivalent of an additional $1.438 billion in revenue.

That's a lot of effective revenue.

DukeEsquire said,

So, rough math, it would have increased their net profits by 2%. That's pretty significant.


Pretty significant? I wouldn't describe 2% of my net income as "pretty significant"...neither would most companies.

Tomer2000 said,

Pretty significant? I wouldn't describe 2% of my net income as "pretty significant"...neither would most companies.


2% is better than 0%, and when youre microsoft and 2% is 'only' $444 million I am sure the company's investors wont be complaining...

DClark said,
I am sure Google would be appreciative of not receiving anything in return for their ideas.

What ideas are they using? That has never been brought up. And if they have a problem with Android, why not go after Google who provides it? Doesn't make sense to go after the manufacturers unless then can more easily bully them into a deal, which is apparently what they are doing.

farmeunit said,

What ideas are they using? That has never been brought up. And if they have a problem with Android, why not go after Google who provides it? Doesn't make sense to go after the manufacturers unless then can more easily bully them into a deal, which is apparently what they are doing.

You are missing the point!

1. Google gives Android away for free. The OEMs are making tons of money by selling something that they received for free. Look at it this way: Google is standing in from of a bank and telling people to walk right in and take money. But Google doesn't own the bank and isn't forcing anyone to take the money.

2. Google doesn't provide any kind of patent or lawsuit protection for OEMS. If any Windows OEM is sued MSFT will send their lawyers in to handle it.

farmeunit said,
What ideas are they using? That has never been brought up.

This is the one thing that no-one EVER brings up. What ARE these companies licencing from Microsoft? The fact is that I don't think that it has anything to do with Android itself, but (given that HTC and Samsung both use proprietary UIs on Android) the vendor-specific addons they create for it.

If Google were violating MS patents in Android, it'd be all over the news, but it isn't, which leads me to suspect that it's not Android at all that is violating patents, but what the vendors are doing with it with their addons.

Is this due to the use of the Fat file system format? (They also semi-targeted / threatened linux distro's about this in the past)

etempest said,
Is this due to the use of the Fat file system format? (They also semi-targeted / threatened linux distro's about this in the past)

Someone mentioned in another thread that google never licensed Exchange ActiveSync from MS. Dunno if it's true or not though.