Microsoft will make $3.4 billion from Android in 2013

Windows Phone 8 may not be selling well, having captured just 5.6% of U.S phone sales in Q1 2013 (despite being a very good operating system). In April of this year, Microsoft won a legal battle that means every Android OEM must pay Microsoft to sell a phone, including LG, HTC and Samsung. 

That deal may be one of Microsoft's most profitable, after BGR estimated earnings from 2013 Android sales at $3.4 billion. According to Microsoft, 80% of Android phones sold in the U.S - as well as devices sold around the world - come under the patent deal, which nets Microsoft $8 per Android device. 

And that $3.4 billion figure is set to increase exponentially as more Android devices are sold over the coming years. In 2017, Microsoft is expected to make $8.8 billion in revenue from the sale of 1.5 billion Android devices, assuming Microsoft collect royalties from 75% of Android devices. If Microsoft only collected royalties for 50% of all Android devices sold, they'd be inline for a $5.9 billion payout during 2017. This money is essentially free, as Microsoft contributes nothing to the Android ecosystem. 

Not only does Microsoft make money from "most" Android devices sold, but also from a massive range of other companies who use the exFAT file format. Microsoft has deals with Sharp (for TVs), Nikon, BMW and Volkswagen, all of which pay Microsoft a substantial yearly revenue. 

Source: BGR, Digital Trends | Image via Digital Trends 

Report a problem with article
Previous Story

Internet Explorer: 'Touch is the new fast'

Next Story

Rumor: 3D smartphone in development at Amazon?

29 Comments

Commenting is disabled on this article.

Microsoft clearly is a leader in capturing the market for mobile operating systems. The organization pushes the envelope in technology. Windows 8 was designed with mobile devices and touch screen technology in mind. The money that Microsoft will generate from other technology companies is ground breaking. I think that my learning should include developing mobile applications for Android iOS so I can get some of that $3.4 billion.

According to max slater Microsoft contributes nothing to the android ecosystem however he's forgetting his whole article that states what Microsoft is contributing: the patents...technology that Microsoft created.

Wow, if Microsoft is projected to make that just from a lousy $8 per handset, how much are the Android manufacturers making?

I'm no fan of MS but they are a corporation and at the end of the day it is their responsibility to shareholders to grind every penny they can so I can't blame them...Apple would do this and so would Google given the same opportunity.

Sonne said,
I'm no fan of MS but they are a corporation and at the end of the day it is their responsibility to shareholders to grind every penny they can so I can't blame them...Apple would do this and so would Google given the same opportunity.

Is the reason Google bought Motorola but so far it's backfiring

MS didn't create Android so they should not be entitled to anything. Our patent system is a joke and it's just a money grabber garbage. MS... if you want to be entitled to royalties, then add to the project so your entitled to something.

soldier1st said,
MS didn't create Android so they should not be entitled to anything. Our patent system is a joke and it's just a money grabber garbage. MS... if you want to be entitled to royalties, then add to the project so your entitled to something.

I think you're missing the point. MS did "add to the project" by licensing its patents to Android OEMs.

soldier1st said,
MS didn't create Android so they should not be entitled to anything. Our patent system is a joke and it's just a money grabber garbage. MS... if you want to be entitled to royalties, then add to the project so your entitled to something.

they added to the project pretty much... if you take out those technologies android manufacturers must pay licence fee for your crap android phone would be just a linux kernel wrapped in a distro ment for digital cameras

Javik said,
If you can't innovate, litigate.

How does this particular overused blurb apply? MS owns the ExFAT file system... the people behind Android chose to use this proprietary format in their software without paying for it.. what do think is fair, MS to say "Gee that's ok, we don't mind, you go ahead and rip us off with no compensation?" That's not exactly realistic.. you use something that's not in the public domain without paying for it, you better expect to deal with the consequences, hardly unique to Microsoft.

IT IS BS.

MS pays $3.4b thanks to patents and such. However, MS is also forced to pay a big amount in concept of patent. In this aspect, Windows phone's OEM also should pay for Nokia for some patent.

Max Slater-Robins said,
This money is essentially free, as Microsoft contributes nothing to the Android ecosystem.

You clearly have no idea how patents work.

Actually pretty good because I want another mobile OS in the market If microsoft puts that money back into windows phone its good thing. Lets face it Blackberry is done. According to latest rumors their latest phones have flopped and they are cutting back on production. Its just matter of time before it exists the market.

smileyctp said,
Suddenly it doesn't sound that bad to buy Nook Media for only $1 billion...

So they want to use money from Android patent deals to buy one of the Android OEMs. I don't know what the rest of you think, but this is pure genius.

come under the patent deal, which nets Microsoft $8 per Android device.

It varies from manufacturer to manufacturer, not a fixed percentage afaik.

This money is essentially free, as Microsoft contributes nothing to the Android ecosystem.

Apart from the various patents...

holy hell, I was eyeballing around 1.5b. Lol, Microsoft might as well switch to Android and just make a live tiles launcher. Or fork Android like Amazon.

cetla said,
holy hell, I was eyeballing around 1.5b. Lol, Microsoft might as well switch to Android and just make a live tiles launcher. Or fork Android like Amazon.

If MS forked Android who would use their version of the OS? What would be the benefit? They would be limited by always running a version of Android behind Google's and Google's partners like Samsung. They would have to worry about Android updates breaking features of their OS and constantly waiting for Google to release code to them.

Smarter to suck the profitability out of Android and funnel all that money into developing Windows which they completely control. Microsoft takes that $3B+ from Android gives $1B to Nokia, $1B to advertising Windows, and $1B to R&D Windows. Developing and promoting and obtaining exclusive support for Windows all on the back of Android.

I thought the same thing , but when I came to know the business side of Android , it is a complete mess. Not even google is making money out of it . That's one of the main reason, the chromebook guy is now heading android (Chromebook been the exact opposite of android in terms of openness).

Obviously they will continue to support android in the short term , but eventually they will have a much more closed platform , although android (as we know it) will continue to grow thanks to heavily invested OEM's like Samsung, LG, SONY, HTC.