Successful business models can always en-cash opportunities and if it’s at the cost of competitor or from their products/services – nothing can be better than that. A year back when Microsoft made an agreement with HTC that entitled it to royalties for all HTC Android phones, no one (probably including Microsoft) ever predicted that it will pay-off so huge in the favor of Microsoft. Today, Microsoft is standing on a cash-pile worth $150 million and is much bigger than what company gained by selling its own Windows Phones 7 mobile operating system in 2010.
According to a calculation, done by Asymco’s Horace Dediu, Microsoft’s gain of $150 million from HTC Android phone is a result of an agreement which forces HTC to shell out $5 for every Android phone company makes. Considering that HTC has sold around 30 million Android phone, Microsoft has gained $150 million from HTC-Android business.
Microsoft sold only 2 million Windows Phone 7 licenses to manufacturers till January and with an estimate of $15 per license fee, Dedie figures that company made only 30 million from Windows Phone 7 last year.
However, the benefit for Microsoft doesn’t end here. The agreement between HTC and Microsoft is based on the claim which accuses Android for infringement Microsoft’s Intellectual property. And if Microsoft rolls on winning streak, a massive cash inflow will happen from various other mobile manufacturers like Samsung, LG, Sony or Acer who are betting high with the enormous growth of Android.
More than 240 million Android phones have been sold in 2010 alone. If we assume that minimum 70% Android phones have been sold through third part hardware manufacturers, like Samsung & LG, it will not be much difficult to calculate benefit of Microsoft even if the company settles down with an agreement, with other manufacturers, identical to HTC.
And with the constant growth of Android and surging sales of Smartphones, we can only assume the massive cash figure which will benefit Microsoft. An Interesting scenario to watch out !!!!!!