Measuring a profit can be a complicated thing my accounting friends tell me. For example, Google, which controls Android, is certainly making money from it, but how much? But, what if you're making $444 million from Android and you actually didn't have to spend any money on research and development or programming? You'd be doing great wouldn't you? Well, welcome to Microsoft's business plan for Android.
According to a Goldman Sachs' tech analyst note, as reported by Business Insider, that's exactly how Microsoft is cashing in on Android. Goldman Sachs estimates that Microsoft will pick up $444-million in revenue from its Android patent deals for fiscal year 2012. For those of you playing at home, that's $3-$6 per Android device. Yes, that may well be more than Microsoft makes from its own troubled mobile operating systems.
That's nice work if you can get it. We still don't know exactly how much Microsoft is getting from its cross-licensing patent deals with Samsung and other Android manufacturers. We don't even know what patents Microsoft is being paid for.
Of the big Android device makers, only Motorola, which is being bought by Google, hasn't paid Microsoft off yet. Microsoft is well aware of this. In a salvo in the Microsoft/Motorola patent war, Brad Smith and Horacio Gutierrez, Microsoft's General Counsel & Deputy General Counsel, blogged, "Motorola Mobility [is] the only major Android smartphone manufacturer in the U.S. without a license."
Considering that Google is buying Motorola Mobility for its mobile patents, I doubt we'll see Google/Motorola paying off Microsoft without a lot of courtroom fighting. After all, a Google spokesperson responded to news of the Samsung deal by saying, "This is the same tactic we've seen time and again from Microsoft. Failing to succeed in the smartphone market, they are resorting to legal measures to extort profit from others' achievements and hinder the pace of innovation. We remain focused on building new technology and supporting Android partners."
Yes, there's no love lost here!
Enjoy your Android profits while you can Microsoft, I foresee legal costs eating into your profit margin, no matter how you measure them, in the years to come.