Microsoft extracts $5 licensing fee per Android device from HTC

Mon, May 30, 2011

Legal, News

It’s no secret that Microsoft is looking to put up the good fight against Android by going after the hardware manufacturers that put it on their devices – which explains why Redmond thus far has gone after the likes of Motorola, Barnes and Noble, and HTC.

HTC, however, was quick to strike a licensing deal with Microsoft, and now a new research report emanating from Citi analyst Walter Pritchard relays that HTC is paying Microsoft $5 for every Android device sold. This is a significant strategic move for Microsoft as it attempts to combat the myth that Android is free. The truth is that hardware manufacturers do have to pay fees to Google for a “true” Android experience with integrated search and the like, but with Microsoft trying to woo hardware manufacturers with Windows Phone 7, anything to make Android more expensive or less appealing is a smart play.

Pritchard also communicated via his report that Microsoft is demanding higher premiums from other Android phone makers, namely $7.50 to $12.50 a device. This is particularly noteworthy given the already slim margins some Android phone makers are working with, especially for companies that sell Android phones on the cheap and try and make up with it in volume.

Microsoft was undoubtedly late to the smartphone market, and though Windows Phone 7 sales haven’t exactly been through the roof, they’re unquestionably using all of their might – technological, legal, and monetary – to play catchup as soon as possible.

Google thus far hasn’t been on the receiving end of any Android-based litigation from Microsoft, but it’s worth pointing out that Google doesn’t exactly have the strong IP portfolio that some of its partners have. Of course, Microsoft isn’t going after Google itself because it’s not opposed to Android as long as its getting a little piece of the pie itself.

Apple of course is also none too thrilled with the prevalance of Android handsets it feels infringe on its IP. Apple in 2010 sued HTC for patent infringement in what is largely considered a proxy battle against Google. Now why HTC? Well, much like Google, HTC lacks the strong patent portfolio of other phone makers and therefore is that much more of an attractive legal target.

The competition in Silicon Valley has never been fiercer and is moving at an unprecedented breakneck speed. And with that, comes an unprecedented number of lawsuits that has almost every major tech company suing each other.

Interesting times.

via Business Insider


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