How Microsoft Wining Over Android – The Most Controversial Smartphone OS

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Today Microsoft has announced its tenth agreement signed with Compal Electronics. In last one year Microsoft has signed various patent agreements for Android with multiple companies. Few days back we have reported about the similar agreement that Microsoft signed with Quatna computers. Interestingly, when we look at last 10 agreements by Microsoft, we learn that it had signed patent deal with various hardware giants like HTC, Samsung, Acer, ViewSonic, Onkyo, General dynamics itronix, Velocity micro, Wistron, Quanta Computers and now Compal Electronics for Android. Compal Electronics is a Taiwan based company which produces smartphones and tablets for third parties and has revenue of $28 billion per year. It’s an interesting fact to know that in just last four months Microsoft had signed nine patent agreements for Android with diverse companies.

Below pic will provide nice idea about Microsoft patent deals with companies:

However, Android has emerged as one of the most controversial OSs till date. Its publicity and market sales are on its peak, “more than 550,000 android based sets are activated every day” as said by Larry Page – CEO Google – at the announcement of  Google Q2 report for 2011 . But from the very first day of Android’s birth, tussle has arose between software giant Microsoft and search engine titan Google due to patent deal. Microsoft had purchased 882 patents from ‘almost-synced’ Novell last year for $450 million and which also include the patents related to development platform of Android. Also, in mid of this year Microsoft, in-pact with several companies, had purchased more than 6000 additional patents from Nortel for $4.5 billion, which had provided more rights to company for signing patent agreements with different companies. On behalf of those patents, company collects license fees on 50 percent of android license cost available in the market. Few days back Microsoft had announced its Q1 report for fiscal year 2012 and had made record revenue of $17.37 billion beating market expectation.

On Today’s agreement with Compal Electronics, Horacio Gutierrez, Corporate vice president and deputy general counsel, Intellectual Property Group at Microsoft, said that:

“We are pleased to have reached this agreement with Compal, one of the leaders in the original design manufacturing, or ODM, industry.  Together with the license agreements signed in the past few months with Wistron and Quanta Computer, today’s agreement with Compal means more than half of the world’s ODM industry for Android and Chrome devices is now under license to Microsoft’s patent portfolio”.  “We are proud of the continued success of our licensing program in resolving IP issues surrounding Android and Chrome.”

Microsoft has responded:

“Over the past decade we’ve spent roughly $4.5 billion to license in patents from other companies”. “These have given us the opportunity to build on the innovations of others in a responsible manner that respects their IP rights. Equally important, we’ve stood by our customers and partners with countless agreements that contain the strongest patent indemnification provisions in our industry. These ensure that if our software infringes someone else’s patents, we’ll address the problem rather than leave it to others.”

From the chart, by TechNet blogs, it’s quite clear that 55 percent of Android device manufacturers or ODMs have signed patent agreement with Microsoft. These manufacturer companies play an important role in manufacturing and designing smartphones and tablets.

Also another chart reveals that 53 percent of OEMs have signed patent agreement with Microsoft for all android phones in U.S.

Recently, investment firm Goldman Sachs has estimated that, based on royalties of $3 to $6 per device, Microsoft will get about $444 million in fiscal year 2012 from Android-based device makers with whom it has negotiated agreements. However, Microsoft is charging $5 from HTC currently for the sale of each handset based on Android OS.

Clouds of uncertainty are still on ownership of Android OS, but Microsoft is making significant profit from Android – which it is still about to cover from Windows Phone OS.


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