Xbox aspect of Dell's Microsoft patent agreement explained

Yesterday, Microsoft and Dell jointly announced the two companies were entering into a patent agreement. One of the more interesting aspects of the patent agreement was the fact that it specifically included “Xbox gaming consoles.”

In a press release, Microsoft said it and Dell “agreed to license each company’s applicable intellectual property related to Android and Chrome OS devices and Xbox gaming consoles.” It further stated that Dell agreed to pay royalties for its products running Android or Chrome “and on consideration to Dell for a license for Xbox gaming consoles.” That line led to some confusion, but it doesn’t mean Dell will be making its own Xbox consoles, however.

According to a Microsoft representative who spoke with Neowin, as the licensing agreement was being made, the sides agreed that some of Dell’s patents applied to Xbox consoles. The representative couldn’t say exactly what Dell patents were part of the agreement, just that Microsoft now has a license to use them.

Some reports theorized Dell could start building computers with Kinect-like features, but that doesn’t appear to be an option in the arrangement.

The deal essentially means the status quo of each company’s products will remain for consumers. The only difference is now Dell pays Microsoft licensing fees for its Android and Chrome products, similar to most other manufacturers. Dell will probably pay less than most manufacturers, however, since the deal was made with the consideration of Dell’s patents being licensed for Xbox consoles.

Image via Microsoft

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So if Dell is paying MS for certain patents, is MS paying Dell for the Xbox patents? I guess at adds more overhead to the cost of the system.

Geezy said,
So if Dell is paying MS for certain patents, is MS paying Dell for the Xbox patents? I guess at adds more overhead to the cost of the system.

Dells patents that are being used by the Xbox probably offset the costs they pay to MS for Android and Chrome devices but only a bit. In the end I think Dell pays MS but less than other OEMs for the android deals because of the dell patents. In the end I don't think MS is paying Dell anything.

Geezy said,
So if Dell is paying MS for certain patents, is MS paying Dell for the Xbox patents? I guess at adds more overhead to the cost of the system.

We're not going to get official figures -- Microsoft never releases the licensing agreement terms -- but the Android- and Chrome-related patents are surely worth far more than whatever Xbox-related patents Dell has. In other words, Microsoft probably subtracts that fee from the Android and Chrome amount (which should still be a decent amount, I'd imagine).

Anthony Tosie said,

We're not going to get official figures -- Microsoft never releases the licensing agreement terms -- but the Android- and Chrome-related patents are surely worth far more than whatever Xbox-related patents Dell has. In other words, Microsoft probably subtracts that fee from the Android and Chrome amount (which should still be a decent amount, I'd imagine).

Yeah, though I don't think Dell is a big android and chrome seller, nothing like Samsung, Lenovo and LG. I think the Xbox related patents might be in regards to the internal layout or something simple, cooling solution maybe or who knows? I doubt it's anything major or highly technical.

Not if they have to pay Dell for the use of the Dell patents that apply to the Xbox, as Dell is doing for the use of some of MS's patents. It means MS has to pay more for each Xbox now, when they weren't doing so before any of this was determined.

Geezy said,
Not if they have to pay Dell for the use of the Dell patents that apply to the Xbox, as Dell is doing for the use of some of MS's patents. It means MS has to pay more for each Xbox now, when they weren't doing so before any of this was determined.

No...

Read the press release again.

Dell will be giving Microsoft money as they will be paying royalties to Microsoft for Android and ChromeOS at a reduced rate in 'consideration' of the licensing of patents for the Xbox.

This means they will be paying a 'smaller' fee than other companies in exchange for letting Microsoft use the technology they claim is in the Xbox.

Also remember, Dell already owes Microsoft a billion or two, as they helped their buyback.

I don't know how you could of confused their press release?... It was pretty clear what it said, and it did say the licenses were for tech in the xbox that Dell had patents on....

Yeah, that's what we reported, but there were several sites that incorrectly stated otherwise, so we went to the horse's mouth and got it confirmed beyond any doubt.