We have heard over the last year that Microsoft has signed a number of patent deals with manufacturers of handsets that run Google’s Android platform.
Microsoft now has deals in place with the majority of Android device manufacturers, on patents that they own, that are used by Android, and now it would appear that Microsoft is making around $2 billion per year from Android.
The news comes from Nomura analyst Rick Sherlund, who has estimated that out of this $2 billion in royalties from Android, around 95 percent of it is pure profit.
Microsoft’s Extensive Patent Portfolio
Microsoft currently has patent licensing deals in place with a wide range of manufacturers of Android devices, which include Nikon, Hon Hai, ZTE, Pantech, LG, Huawei, Compal, Samsung, HTC and more. These deals are a testament to Microsoft’s extensive patent portfolio, which covers a broad spectrum of technologies used in Android devices. The patents in question often relate to essential features and functionalities, such as file storage, user interface, and communication protocols.
Whilst the exact amount each company pays Microsoft is not known exactly, payments are rumored to be between $5 and $10 for each device that is sold. This might seem like a small amount per device, but when you consider the sheer volume of Android devices sold globally, the numbers add up quickly. For instance, in 2020 alone, over 1.3 billion Android smartphones were sold worldwide. Even at the lower end of the rumored payment range, this would translate to substantial revenue for Microsoft.
The Impact on the Android Ecosystem
If you take into account how many Android devices are sold each year, this is very lucrative for Microsoft and you can see why the company may be making around $2 billion per year from Android. This revenue stream is particularly interesting because it comes from a competing platform. While Microsoft has its own mobile operating system, Windows Phone, it has not achieved the same level of market penetration as Android. Therefore, these patent deals allow Microsoft to profit from the success of a rival platform.
The impact of these patent deals on the Android ecosystem is multifaceted. On one hand, they provide a steady revenue stream for Microsoft, which can be reinvested into research and development, potentially leading to new innovations. On the other hand, these deals add to the cost of manufacturing Android devices, which could be passed on to consumers. However, the competitive nature of the smartphone market often means that manufacturers absorb these costs to keep their devices competitively priced.
Moreover, these patent deals highlight the complex nature of intellectual property in the tech industry. Companies often hold patents that cover a wide range of technologies, and licensing these patents can be a significant source of revenue. This is not unique to Microsoft; other tech giants like Apple and Google also engage in similar practices.
In conclusion, Microsoft’s patent deals with Android device manufacturers are a significant source of revenue for the company, bringing in around $2 billion per year. These deals underscore the importance of intellectual property in the tech industry and highlight the complex relationships between competing platforms. As the number of Android devices continues to grow, so too will the revenue Microsoft earns from these patent deals.
Source Business Insider
Latest Geeky Gadgets Deals
Disclosure: Some of our articles include affiliate links. If you buy something through one of these links, Geeky Gadgets may earn an affiliate commission. Learn about our Disclosure Policy.