Reality check: Microsoft charging vendors a $15 patent fee per Android device?

Reality check: Microsoft charging vendors a $15 patent fee per Android device?

Summary: I'm thinking the alleged $15 per Android device per year patent licensing fee Microsoft is said to be seeking from Samsung is the Softies' saber-rattling price. Here's why.

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There's a report making the rounds, spurred by a July 6 story in South Korea's Maeil Business Newspaper,  claiming Microsoft is seeking to charge Samsung $15 per Android device to cover patented technology owned by Microsoft.

I'm thinking this amount is probably Microsoft's saber-rattling price -- the one meant to scare Android vendors into signing onto the growing list of Android OEMs who've decided it's safer to settle than fight Microsoft over its IP claims. It's definitely a lot higher than the $5 per device that one analyst claimed Microsoft is getting from Android phone vendors like HTC who've agreed to pay Microsoft for patent coverage.

Barnes & Noble, one of the few Android vendors that has decided to take its licensing battle with Microsoft public, mentioned Microsoft's tactics in its answer to Microsoft's complaint over the Android-based Nook. From my blog post from April regarding the B&N response:

“Microsoft nevertheless maintained that it possessed patents sufficient to dominate and entirely preclude the use of the Android Operating System by the Nook,” according to the (B&N) complaint. “Microsoft demanded an exorbitant royalty (on a per device basis) for a license to its patent portfolio for the Nook device and at the end of the meeting Microsoft stated that it would demand an even higher per device royalty for any device that acted ‘more like a computer’ as opposed to an eReader.”

B&N’s response also said that Microsoft was seeking a more than double per device royalty for the color version of the Nook — an amount B&N officials believed be “higher than what Microsoft charges for a license to its entire operating system designed for mobile devices, Windows Phone 7.”

I haven't seen a dollar figure as to what Microsoft charges its own Windows Phone OEMs for each copy of the Windows Phone OS that they license. But let's pretend the double-per-device royalty B&N mentioned is the $15 that Microsoft is supposedly seeking from Samsung. That would mean the "regular" Microsoft royalty payment per Android phone would be in the $7 range. And the fee that Microsoft is charging Windows Phone OEMs per copy of the OS would be something just under $15 per copy. (All guesses here; Microsoft hasn't responded to my request for comment, and at best, I'm expecting a no comment.)

It's worth noting that Microsoft officials have not shared publicly a list of Microsoft patents upon which they contend the Android operating system infringes. B&N said in its response to Microsoft's complaint that Microsoft officials told them the Android-based Nook infringed on six of Microsoft's patents, and that Microsoft expected B&N to sign a non-disclosure agreement to get more specifics (something that B&N has declined to do, according to its response).

Microsoft's Android-patent push is a continuation of its campaign, begun last year, to show that the Android operating system isn't really free.

Topics: Windows, Microsoft, Operating Systems, Software

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • RE: Reality check: Microsoft charging vendors a $15 patent fee per Android device?

    I would like to know what those 6 patents are. Why doesn't Microsoft just buy B&N or the Nook so that they will have a competent device? Weren't they digitizing all of the world's written works anyway?
    ronaldjc
    • That's Google digitizing everything. This way

      @ronaldjc
      you don't need to pay a writer or publisher to read the book - just go to Google and read it for free (while they make lots of ad revenue!)
      Will Pharaoh
      • RE: Reality check: Microsoft charging vendors a $15 patent fee per Android device?

        @Will Pharaoh Yes, Google, the company that does no evil. Because infringing on (copy)rights of writers/authors and content creators (who don't get paid much to begin with) is not evil.
        jazzbythebay
      • Google, the company that does no evil ....

        @Will Pharaoh, @jazzbythebay - that's a little unfair; Google was using the system in good faith long before M$ came up with their (as yet unproven) claims. And if M$ get it, do you really believe their salaried creative teams will get rewarded? Dream on, Sucka!
        Heenan73
      • RE: Reality check: Microsoft charging vendors a $15 patent fee per Android device?

        @Will Pharaoh

        No Google is just digitizing orphaned books. For those who like you can't read past the headline, that means that they're making accessible works that the stuffy conservative elite decided cost to mush for too little return to publish. So, authors 1. Weren't getting paid at all and 2. Weren't getting any market exposure, meaning that no one even knew they were writers.

        Effectively, Google is giving these people a shot at being able to earn on future works.
        tkejlboom
      • Microsoft are doing it too

        @ Will Pharaoh<br><br>I was surprised to notice that some scanned historical (19th century) books on archive.org were sponsored by MSN. I also read an article referring to Microsoft's partnerships with some libraries, so maybe they're sponsoring some book scanning. I haven't heard of any lawsuits, so I assume they're only scanning books that are no longer in copyright -- unlike Google, who scanned everything.<br><br>Scanning out-of-copyright books is clearly a good thing, provided the collections are made available to the public and not hoarded by private entities for use in connection with advertising schemes. It was a good idea of Google's management to start doing it, but they didn't just scan out-of-copyright books, they scanned everything, and put all the stolen in-copyright books into their database.<br><br>Google didn't release scans of the in-print books they stole to the public (though they did initially release some scans of in-copyright but out-of-print books), but they had no right to scan them without permission from the copyright holders, nor to use them to build their book search feature. They may also be using the stolen books to improve algorithms, e.g. the ones they use for translation.<br><br>Google may be able to buy off authors/publishers in the US who have sued (perhaps their original plan -- steal the books and then settle for an amount lower than the resulting advertising profit), but I don't think they're having as much luck here in Europe, especially since authors typically have moral rights etc. (except in the UK -- and also Ireland, I think).
        WilErz
      • Well, I'm assuming that since Google kind of ignores copyrights, that....

        @Will Pharaoh
        .....that new book Eric Schmidt is writing will not be copyrighted, and will be given away for free to any and all. Right?
        Userama
    • MS should focus on marketing WP7.

      @ronaldjc,

      What MS is doing with patents is interesting. I wish however that MS would go back to marketing Windows Phone 7. The media is flooded with Android ads - and to a lesser degree, iPhone ads - but you hardly see any WP7 ads nowadays, and <a href=http://wmpoweruser.com/microsoft-mobile-operating-systems-continue-to-lose-market-share-in-usa/#disqus_thread>it looks as if sales of WP7 phones are declining.</a> I think MS should get a set of celebrities to consistently hawk WP7, because that may be the cheapest, most effective way to counter the avalanche of Android ads out there. MS needs to consistently market WP7 phones, until they reach critical mass - and the platform is nowhere near that point. If MS has a problem with salespersons pushing other smartphones over WP7 phones at stores, maybe its ads to should encourage prospective users to buy them online.
      P. Douglas
      • You can't ignore one side while working the other

        @P. Douglas
        I agree that they should market WP7 better, but at the same time you don't want to continue to market against something that has your IP in it.

        They have different departments that focus on particular aspects of the business, like any other.

        Look at Apple, buying parts from Samsung component division, while suing a Samsung manufacturing division.

        Go figure?
        Will Pharaoh
      • They should wait for Nokia

        @ P. Douglas

        The Nokia deal will probably pay off, but in the short run it's probably having a strong negative impact on demand for both existing Windows Phones and, even more so, existing Nokia smartphones. I was considering looking at a Windows Phone, but after the Nokia/Microsoft announcement, I lost all interest in a pre-Nokia Windows Phone -- I haven't even bothered to look at one in a shop.

        Once the Nokia Windows Phones are on the market, along with an OS release that irons out the initial flaws, Microsoft should make a big push. To do that, they really need the support of the mobile operators. They'll have in Europe (the major operators here aren't very happy with Apple and Google, and urged Nokia not to adopt Android), but by the sound of things they haven't really got any of the US operators on board as solid partners. They need to fix that. If they do, it could be a huge boost to both Microsoft and Nokia.
        WilErz
      • It is important that MS continue its WP7 marketing now

        If MS wants to go around making revenue from patents that's fine. At the same time though, it has to at the very least maintain its market share, or else the smartphone market (which includes carriers and developers) will lose faith in, and abandon the platform. Also MS would have to start from scratch again, with a new marketing campaign, which would be relatively costly.
        P. Douglas
      • RE: Reality check: Microsoft charging vendors a $15 patent fee per Android device?

        @P. Douglas ... Microsoft IS actively promoting Windows Phone, but for now it's towards developers while they wrap up development for Mango's fall release. At that point, you'll see a more feature-rich phone platform that they can heavily market and promote... especially since 90% of the stuff they've added comes from user-requests and not just "hey let's add this because we want to look like we're inventing something new."
        GoodThings2Life
      • RE: Reality check: Microsoft charging vendors a $15 patent fee per Android device?

        @P. Douglas
        Imagine if Linux had Googles, Apple and Microsoft's $$$ funds to promote Linux. Android runs on top of a Linux kernel and is a usable System not without it faults. Google has shown that a Linux base system is sell-able to the average consumer. Linux may not have the Desktop market but it controls so much behind the seen's. It good to see others are playing the advertising game Microsoft has played for years to brainwash the average user in to thinking a computer only comes with Windows. Times are changing and Windows 8 better exceed what Apple and Android are offering when released or Microsoft will lose more users as time goes by. These patent fees are just insurance against the failure of Windows 8 and will allow Microsoft to collect cash even if they don't sell anything useful in the future. Truth Linux is for those who want to control the computer not be controlled by it. Yes Linux isn't for everyone but if a user takes the time to learn it, the rewards and freedom it brings far out way the hardships along the way. My 4 and 6 year old girls use Linux every day. Boot it up by themselves and use it. If they can anyone can be a Linux user!
        John Biles
      • RE: Reality check: Microsoft charging vendors a $15 patent fee per Android device?

        @P. Douglas
        When your oponent is busy digging a hole, the best marketing strategy is to hand him a shovel.

        In 5 years no-one will remember Android. It has been managed apallingly.
        Major Plonquer
      • Apple already showed that a good desktop on top of Unix will sell

        @ John Biles

        Linux is just the kernel, like the Mach/BSD kernel that OS X runs on. As far as Android goes, the kernel is relatively unimportant. It's just one part of Android, and Android, not Linux, is the mobile OS mobile phone vendors are buying ( (funded and marketed by Google) and pushing to consumers.

        Consumers like Android. They don't like desktop Linux, no matter how much money is thrown at marketing it.
        WilErz
      • RE: Reality check: Microsoft charging vendors a $15 patent fee per Android device?

        @P. Douglas Thats cause no one wants a WP7 and they might as well save there money. Duh.
        xSteven777x
      • RE: Reality check: Microsoft charging vendors a $15 patent fee per Android device?

        @P. Douglas MS's marketing of WP7 has been terrible, as most of us on the official blog have pointed out. None of their ads have really focused on the strengths of the phone - they just showed stuff like "the phone to save us from our phones" (but didn't really explain why), the "faster" camera ads, and now a new ad campaign they showed on the blog that almost doesn't show the phone at all, but wants us to focus on human interest stories of people using WP7 phones.

        They need to advertise... THE DAMN PHONES! Look at Android ads - they advertise the phone and OS. Very rarely do you see other things on the screen but the phone and features of the phone. No human interest story, no tagline, just the phone and its features.

        The other issue is that, really, advertising of new phones is done MOSTLY by the carriers. Have you seen any AT&T ads for the Samsung Focus lately? I haven't. I sure have seen a lot of AT&T's ads for the iPhone. I have yet to see a single Sprint ad that shows the HTC Arrive, or a T-Mobile ad showing the HTC HD7, or a Verizon ad showing the HTC Trophy. Carriers ride the fads - Sprint made their bed with Android years ago, as did Verizon, but now Verizon has their own spiffy iPhone to advertise. AT&T made their bed with Apple and continue to act as though they're the only place to get iPhones and iPads.

        I guess what I'm trying to say is that WP7 advertisement by Microsoft has been dismal and they've left a lot of it up to the carriers - who just don't care. Just like the update issue, this is a situation that Microsoft needs to step up and take the bull by the horns. To hell with the carriers. They only care about pushing out phones like the iPhone, or the HTC Thunderbolt, or the EVO 3D...
        Captiosus
      • RE: Reality check: Microsoft charging vendors a $15 patent fee per Android device?

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        ivandulin
    • RE: Reality check: Microsoft charging vendors a $15 patent fee per Android device?

      @ronaldjc
      Probably "Page Up" and "Page Down" are one of them. I hope B&N's challenge gets that one dismissed, I'm still annoyed about it 3 years later.

      Of course that's just my opinion, I could be wrong
      914four
    • RE: Reality check: Microsoft charging vendors a $15 patent fee per Android device?

      @ronaldjc Read the linked pdf, it says what the patents are and is quite entertaining reading. Shows the bullying M$ attempts when dealing with companies.

      Nice to see a reputable company stand up to them rather than just knuckle under and pay the into protection racket.
      xrxca