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Summary: Microsoft is raking in $5 for every Android handset HTC sells thanks to a lucrative patent settlement, according to Citi analyst Walter Pritchard.
Microsoft is raking in $5 for every Android handset HTC sells thanks to a lucrative license deal, according to Citi analyst Walter Pritchard.
What’s more, the Redmond giant is putting the squeeze on other Android handset makers and is looking for an incredible $7.50 to $12.50 per device. And Microsoft is likely to be able to negotiate these settlements, because as Pritchard says, “Google appears to have very little IP to defend itself with.”
In other words, Microsoft has Android over a barrel.
Man, patent settlements are might lucrative, so lucrative in fact that Asymco believe that Android is earning Microsoft five times more income than its own Windows Phone operating system.
Microsoft has admitted selling 2 million Windows Phone licenses (though not devices.) Estimating that the license fee is $15/WP phone, that makes Windows Phone revenues to date $30 million.
In a market where Android OEMs are working to an operating margins of between 10-15%, this is a lot of money hemorrhaging away. Android tablet operating margins are absolutely razor-thin, at between 2-3%. OEM settlements here along the same magnitude as those for handsets could have a very chilling effect on tablets.
I’ve been saying for some time now that patents will become Microsoft’s new cash cow to help bolster up the bottom line as people spend less on new PCs and software. It’s an amazing pot of gold to plunder.
So, buy an Android HTC handset, or a Windows Phone handset, and it’s money straight in Microsoft’s bank account.
Microsoft’s not the only one throwing its legal weight around when it comes to Android. Here’s a handy chart drawn up by Pritchard:
Click for larger image
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Adrian Kingsley-Hughes is an internationally published technology author who has devoted over a decade to helping users get the most from technology.
All opinions expressed on Hardware 2.0 are those of Adrian Kingsley-Hughes. Every effort is made to ensure that the information posted is accurate. If you have any comments, queries or corrections, please contact Adrian via the email link here. Any possible conflicts of interest will be posted below. [Updated: February 23, 2010] - Adrian Kingsley-Hughes has no business relationships, affiliations, investments, or other actual/potential conflicts of interest relating to the content posted so far on this blog.
Adrian Kingsley-Hughes is an internationally published technology author who has devoted over a decade to helping users get the most from technology -- whether that be by learning to program, building a PC from a pile of parts, or helping them get the most from their new MP3 player or digital camera.
Adrian has authored/co-authored technical books on a variety of topics, ranging from programming to building and maintaining PCs. His most recent books include "Build the Ultimate Custom PC", "Beginning Programming" and "The PC Doctor's Fix It Yourself Guide". He has also written training manuals that have been used by a number of Fortune 500 companies.
Adrian also runs a popular blog under the name The PC Doctor, where he covers a range of computer-related topics -- from security to repairing and upgrading.
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