Microsoft's most profitable mobile operating system: Android

Microsoft's most profitable mobile operating system: Android

Summary: Microsoft has had trouble getting people to use its Windows Phone operating systems, however, it might make as much as $3.4 billion on Android phones.

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To some, Windows 8 is a marketplace failure. But its flop has been nothing compared to Microsoft's problems in getting anyone to use its Windows Phone operating systems. You don't need to worry about Microsoft's bottom line though. Thanks to its Android patent agreements, Microsoft may be making as much as $8 per Android device. This could give Microsoft as much as $3.4 billion in 2013 from Android sales.

MobileOSMarketShareApr2013
Years of trying, running Nokia into the ground as a de facto Microsoft sub-division, and Windows Phone still has no marketshare worth speaking about. (Image: NetMarketShare)

There's nothing new about this. Microsoft has been making hundreds of millions a year from Android since 2011. Where do these profits come from? Patent licenses. And if vendors don't want to pay, Microsoft will threaten patent lawsuits. Sometimes, Microsoft even follows up with an actual lawsuit.

The object, however, isn't to win in court. In recent months, Microsoft has convinced Foxconn, the world's largest contract electronics OEM, Nikon, ZTE, and numerous other Android OEMs that it's cheaper to pay off Microsoft by acquiring a patent license than it is to fight them in a lawsuit.

Today, only Motorola Mobility, a division of Google and Huawei, remains free of the Microsoft-Android intellectual-property (IP) tax. In a statement to Dow Jones Business News, Google spokesman Matt Kallman said: "This is the same tactic we've seen time and again from Microsoft. Instead of building great new products, Microsoft attacks the competition, and tries to drive up the prices of Android devices for consumers."

No case has ever been successfully made for any of Microsoft's undisclosed patents that are being used to profit from Android, but that's not what is important for businesses. The bottom line is that it's usually cheaper to pay off patent trolls than it is to fight them in court. Whether Microsoft's publicly undisclosed patents are valid or have any relevance to Android is beside the point.  

That's why Motorola Mobility's patent lawsuit against Microsoft is anything but done. In today's legal climate, the biggest companies use patents to battle over market share and patent licensing. Nokia, Microsoft, and Oracle's attempt to knock Android out of the European Union market as "a below-cost Trojan horse", is simply another tactic in their legal attempts to win profits from a market where Microsoft is unable to compete with its products.

Eventually, if Google is successful, then the Microsoft's Android patent tax will be contracted away in sealed settlement documents. Until that day, Microsoft will continue to profit from mobile operating systems — it just won't be from its own failed mobile operating systems.

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Topics: Legal, Android, Google, Microsoft, Mobile OS, Mobility, Windows Phone

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177 comments
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  • I'm outraged

    because of this extorsion by legal goons.
    The FOSS community demands that DoJ should step in stops these free market abuses!
    LlNUX Geek
    • i'm outraged by the use of pie charts

      Please do a web search on Stephen Few and the myriad of ways to visualize data more effectively.
      it's an outrage my eyes tell you
      hubivedder
      • Agreed,

        I have nothing to point out about the article itself besides this.

        Pie charts (and indeed, even percentages, are very misleading).
        icyrock
        • Well this is some of

          SJVN's finest work... Once again hahaha
          Throw All The Things
          • You know Stevie Boy

            He has a big pot full of ka-ka and he loves to stir it. If he bends the truth any more it'll snap. I feel sorry for the guy. He and his beloved Linux are both has their sell by date.
            Blogsworth
          • A market is a market

            Since when is this a new idea
            Tim Jordan
          • I tried Apple and now I am convinced...

            This is a good OS for a non business.
            Tim Jordan
          • Don't forget

            Android is linux :P
            C.Gul
          • Android is linux...

            "Our most potent Operating System competitor is Linux and the phenomena around Open Source and free software. The same phenomena fuels competitors to all of our products. The ease of picking up Linux to learn it or to modify some piece of it is very attractive. The academic community, start up companies, foreign governments and many other constituencies are putting their best work into Linux." Bill Gates
            It all fits.
            Robynsveil
    • I'm surprised

      where do you hide when Microsoft settles the patent law suites with patent trolls. Why don't you hope Google to innovate instead of invading into others IP? why it's hard for them to be fair in the game?
      dugbug11
      • first thing to be done

        is to stop calling obvious things that anyone could come up with - "someone's ip"
        polarcat
        • Google woudn't have wasted billions on Motorola

          only if things worked that way...and IBM and Microsoft wouldn't be filing thousands of patents each year
          dugbug11
          • About Google and Motorola

            So many people think that Google, which owns Motorola, doesn't create issues on patents. But have you seen what they have done with Motorola at Microsoft? They continue to bring lawsuit after lawsuit for these alleged patent infringements that Microsoft's various products have supposedly infringed upon. They usually target the Xbox. Just look this up. And it was not all that long ago when Google tried to ban all Microsoft products from being sold in Germany and for a while they succeeded. SJVN is completely blind if he doesn't see that Google is not one inch better than Microsoft in this "anti-competitive" matter.
            Jabe124
          • Re: About Google and Motorola

            Yeah, it's called "fighting back." As in, "we won't start this fight, but we *will* finish it." There's a big difference between that and Microsoft's patent trolling.
            masonwheeler
          • Fighting back?

            Motorola and Xbox have been around YEARS before Android. With this "Google is fighting back argument" you can say that Microsoft is fighting back from Google's Motorola which wants to get rid of Microsoft products years before Android even existed. This whole notion that Google is a company with a halo above its head and following the motto "Do no evil" is completely absurd. You could very well make the argument that Google is a patent troll because they own Motorola who is a guru of patent trolling. Google is just as evil as Microsoft is just as evil as Google. Google is a company just like everyone else.
            Jabe124
          • Google CEO was on Apple's board

            when the iphone was being develop. From Aug 2006 to Aug 2009.
            ASPNET
        • America - the paradise of patent trolls

          No wonder why one of the most wealthiest people in USA are jurists and working class is suffering.
          Frankie1965
        • Ah yes, that old argument.

          The problem is, almost everything is obvious in hindsight. Hence when a good idea comes along, everyone else always says, "why didn't I think of that?"
          Jason Joyner
          • You can't patent an "idea', just an actual implementation.

            Or at least, that's the theory (and part of the justification) for patents in the first place.

            And that's the fundamental problem with software patents; they're essentially patents on ideas. And that's how we end up with patents on FAT (File Allocation Table) file-systems and FAT/lfn (long file name) hacks, and 1-click shopping, and "bounce-back scrolling (ie. animation of a physical scroll) and similar nonsense.

            The problem isn't just that MS is cynically "enforcing" patents as a means of legal extortion, but that the patents in play are of value *only* insofar as the serve as ammunition for a strategy of litigation in lieu of actual innovation and competition.
            bswiss
      • Even if you're pro-software-patents, the MS approach is extortion

        They try to get more in licensing fees for their purported IP in Android than they charge OEMs for WinPhone. All while not even discussing the patents until after you sign an NDA.

        What are they afraid of people seeing? B&N gave us a glimpse, before being bought out - FAT32, 8.3, etc. Yes, the very HEART of Android's capability, certainly worth a huge fee.

        Sheesh.
        daboochmeister