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Microsoft makes more in Android royalties than Windows Phone

updated 12:45 pm EDT, Fri May 27, 2011

Analyst says Microsoft leaning on Android royalty

Microsoft is making five times more money from its Android royalty schemes than from its own Windows Phone 7 platform, Asymco's Horace Dediu said in a dissection of a Citi research note. Based on claims by analyst Walter Pritchard that HTC is paying $5 per phone for Android-related patents Microsoft says it owns, Dediu determined that HTC has had to pay a total of $150 million for the 30 million Google-based phones it has shipped so far. With Microsoft have so far only reported shipping two million WP7 devices and charging $15 for the OS on each phone, it would have only made $30 million from its own platform.

The WP7 figure could be higher, but Microsoft has remained deliberately secretive about how many devices have shipped since it gave the number earlier in the year. Gartner has estimated that Microsoft partners shipped 1.6 million WP7 devices in the winter but that Windows Mobile was still larger.

Its rate if accurate could reveal a double-standard royalty scheme at Microsoft, where companies are charged more or less depending on whether or not they also promise to use Windows Phone. Pritchard believed Microsoft's lawsuits against Motorola and other Android-only device makers were demanding a royalty of between $7.50 and $12.50 per unit, well above what HTC was asked. Microsoft notably avoids suing companies like Dell, LG, and Samsung that support both and have otherwise been regular Microsoft partners.

The royalty differences helped support beliefs that Microsoft's strategy had little to do with patent ownership and more with hampering competition. By reducing the already low 10 to 15 percent margins on Android phones, and two to three percent on tablets, Microsoft is hoping to make it unprofitable to sell Android without at least also offering Windows Phone, if not switching over entirely.

Its actions could get it into legal trouble. Barnes & Noble has accused Microsoft of antitrust violations by demanding royalties on the Nook and Nook Color that would be so high as to make selling the Android-based readers impossible. The response alleged that Microsoft was asking for much more than what it was for Windows Phone, suggesting that in some cases Pritchard's estimates were low.

by MacNN Staff



  1. WiseWeasel

    Joined: Dec 1969



    Yet another clear demonstration of the faulty software patent system we've got in the US, where innovative newcomers to the market are systematically defrauded by parasitic incumbents, too complacent to create their own value for consumers.

  1. Jonathan-Tanya

    Joined: Dec 1969


    the patent system stifles innovation

    Although the patent office may grant you a patent on that solution you created - the nature of writing programs is such that any competent programmer could have also invented that same solution.

    What people don't seem to understand, is Android is not a copy of Windows Phone, or even iOS.

    What Android is, a smartphone operating system, and when you write software, you solve the same problems - it takes calls, it has a contact list, it takes emails - as you solve those same problems, it's obvious and expected you will come up with solutions that any reasonable person would have come up with.

    It is NOT the case, that without a patent system, you woulnd't have written the software - without a copyright system you might not have written the software - but you didn't need a *Patent* to incentivize creation.

    The problem is we've made ordinary engineering and programming tasks with obvious solutions into *patentable* "inventions".

    There should never be a patent on software - NEVER ON SOFTWARE.

    Don't be confused, you can, of course, protect against copying with copyright laws. There is just no need for "Patents" because in the world of software patents are always on obvious ideas, and this is why its wrong.

    Now you just gave someone an exclusive right to a "submit" button or whatever - and its now going to stifle innovation.

    Microsoft, Apple and the biggest players love this innovation stifling atmosphere, they love an atmosphere where only the largest can compete with teams of lawyers - because they are the largest, and they have teams of lawyers, and this systematically works in their favor.

    But its not in societies favor - and if only the average person could ever get the attention of their Senator - but we never will, so its basically hopeless

    sorry, didn't end that on a cheery note :)

  1. SockRolid

    Joined: Dec 1969


    The 800 pound gorilla

    The Oracle suit will drive more than just one more nail into the Android coffin. Worst case: Google will either be forced to "impound and destroy" all Android software as required by the suit. Best case: Google will be forced to pay Oracle a license fee for each and every copy of Android ever sold. But only if and when Android's JVM is re-written to be 100% compliant with Java.

    Oh, and the Oracle lawsuit isn't about patents. It's about license violations. Microsoft violated the Java license and paid Sun Microsystems for it, way back in the day. Google will either pay up or let Android die. (Which may be Google's plan anyway. Chrome OS will inevitably replace Android's hopelessly fragmented weedpatch.)

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