Android makes Microsoft more money than Windows Phone

Legal

According to a report by Citi analyst Walter Pritchard, Microsoft may be making more money off Google’s Android operating system than it makes off its own Windows Phone platform — five times more, in fact. Pritchard states that as a result of a patent settlement, HTC is required to pay Microsoft $5 for every Android phone sold. Analyst Horace Dediu estimates that HTC has sold 30 million Android smartphones to date, which adds up to $150 million in the bank for Microsoft. Dediu notes that Microsoft has reported Windows Phone sales totaling 2 million licenses to date, and he estimates the company’s license fee to be $15 for a total of just $30 million. Pritchart notes that Microsoft is currently suing other Android phone makers for infringements on the company’s intellectual property, and is seeking between $7.50 and $12.50 per device sold. As much money as the company is making on sales of HTC’s Android phones, it’s easy to see why Microsoft is pursuing other cell phone makers with similar suits.

[Via Asymco]

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61 Comments
  • Anonymous

    In turn, Microsoft has 100% profit margins on Android. HTC most likely has a margin around 7-10%.

    • Anonymous

      Not sure about that, It would depend on how much money Microsoft has in it’s patents and legal filings. Still, $150 million is not bad…….

  • Thekingisback7

    Wow go Android!

    • Anonymous

      Umm maybe reread the article.

      • Droidman101

        Ummm… maybe don’t troll about 2 OS’s you have absolutely nothing on…

      • Anonymous

        Yes i do a HTC HD 7. So much for your useless comment.

  • Mobiledave18

    WTF

  • http://www.droiddoes.com/ Norm

    YES! DROID DOES BABY!!! RIP WP7! You suck! Your next crApple!

    • Anonymous

      Umm maybe reread the article. 

    • Anonymous

      I am with you! RIP WP7!!!

  • Anonymous

    Gotta love patent thickets, where everyone races to patent everything they can think of — not so that they can use it, but so that they can sue other people who use it.

    These days, it’s hard to believe any patent lawsuit between major companies has merit. It’s just a way of trying to stop someone from doing something that you don’t like, or would rather they didn’t do. It’s competition through litigation, it’s asinine, and it’s a massive waste of money.

    • Bullyboyb

      You talk with such authority on a subject you know very little about.

      • Anonymous

        I don’t claim to know a lot. But this is the internet, and I feel comfortable putting my opinion out there. I invite discussion and am willing to change my mind if I feel the evidence is compelling.

        You should be warned that I read Techdirt, though. So saying, “it’s good because that’s how it’s always been” isn’t compelling. So since you’re saying I know nothing, educate me!

      • Senor Chang

        I don’t know anything either.  Please enlighten us on the patents that MS trolled here, along w/ the date of when MS acquired these patents VS when the lawsuit occurred.

        No really, no sarcasm… I really want to know this info.

      • bullyboybfan

        Well I’m convinced.  You so smart!

    • Steel

      Perhaps the best way to avoid such patent races where something is patented merely to head someone off is to require production.   Essentially, it discourages progress to not allow anyone else to produce new tech, so something should only be patented if it is then produced within 3 yrs time.  If not, the patented technology becomes public domain.

      what say ye?

      • Anonymous

        I like the idea, but I could see a lot of problems in regards to people who have an idea that definitely should be patentable but don’t have any way to execute it.

        The patent system in this country could probably do with a meaningful amount of reform, but there’s no one interested in doing that.

      • Droidman101

        I agree, the reason being:
        Company A comes up with a great new technology, but it will take them 5 years to get the facilities to begin production of prototypes.
        In 2 years, Company B finds out about the technology . However, it has the facilities, it just will take 1 year of tweaking to create prototypes and does so and gets a patent.
        Because Company A didn’t patent anything, 3 years and countless money have been wasted on a product that will take 2 more years to complete, while their rival improves on their design and conquers market share, and Company A can do nothing about it. When they finally get their product out, Company B sues them for patent infringement.
        So yes, I agree with what you’re saying, but the time needed to do something would have to adjust according to what it is, which people will argue about and sue about and it will be a whole mess and come out different from what it was supposed to be and end up working worse than what there was before.

    • Anonymous

      It’s not patent trolling when you filed for the patent yourself. It is when you buy patents JUST to sue.

      Most patent cases are filed by major companies are in defense or in a preemptive strike; they’re to ward off the other company from doing the same. It’s a “cold war” with lots of posturing and dances in court. When’s the last time you saw a company actually win an injunction against another major company?

      Every now and then, a patent (which is reviewed by multiple courts, including appeals) IS valid, and a large company wins a judgement or negotiates a settlement with another major company for a licensing deal. In the above case, either the law sided with the plaintiff, or the defendant felt the lawsuit had enough merit that settling was in its best interest.

      • Anonymous

        Or or the defendant felt that it didn’t make economic sense to fight the lawsuit, and decided to pay up regardless of whether the patent has actual merit or not.

        I’d be interested to know whether those patents were filed by Microsoft or, let’s say, purchased from Intellectual Ventures…

        You do make a good point, though. Most patents are purchased defensively. However, in the last couple of years, it seems that there’s a lot more utilization of these patents to try to bludgeon other companies (see: Apple, Microsoft, HTC, Motorola, Kodak, etc. ad nauseam).

        I guess we’ll find out who’s willing to fight soon enough. My guess is going to be that Samsung and Apple are going to be the only companies really hashing it out, since Apple (IIRC) is trying to get some kind of injunction on everything TouchWiz.

  • Anonymous

    Way to stick up for yourself, HTC, ruining it all for the other Android handset makers. Guess you don’t like money.

    • Senor Chang

      Guess you don’t like to read.

      HTC and MS partnered up to fend off the King of Troll Patents, Apple.  This whole deal was to have MS get HTC’s back so Apple couldn’t come at them.

      As alwasy… people want to comment and assume a bunch of garbage.

      • anDROIDfan

        Actually, you should read the article more carefully. This has nothing to do with anyone “partnering up”, but rather, a settlement between HTC and MS probably because HTC decided not to use windows phone 7 in their phones. MS had been offering the major mobile phone makers using DROID OS not to file a lawsuit if they licensed windows phone 7

      • Droidman101

        Errr…wrong, this deal was made LOOOOONG before MS came out with wp7.
        As in, before the Droid Incredible was a speck on the horizon.

      • anDROIDfan

        @Droidman101:disqus, Have you been waiting to use “Err…wrong” for a long time? This deal was announced by microsoft on April 27, 2010 and verizon launched the incredible April 29, 2010.
        Google “Microsoft Announces Patent Agreement With HTC”, then google “HTC Droid Incredible release date” and see what you come up with.

    • http://www.twitter.com/wixostrix WixosTrix

      This area is so subjective.  You say HTC ruined it for everyone, but everyone is using technology that is owned by someone else (the ideas anyway).  It seems screwed up, but no matter how screwed it seems, that is the way the patent system works, and all these companies know that because they are all suing each other over the same damn thing.  Don’t feel bad for HTC or think they made the wrong choice, they are just complying with the laws.  Like I said before, until there is reform in the patent system, you can’t blame these companies for taking advantage.  They are in it to make money and that’s just the way our capitalists societies work.

  • Anonymous

    Msft wins either way lol.

    • http://www.twitter.com/wixostrix WixosTrix

      Yup, laughing all the way to the bank.

  • Anonymous

    I see a lot of “estimates” and “may”s in that writeup.  Of course, I also see an opening phrase of “According to a report by Citi analyst…Microsoft may be making more money”  compared to the headline of “Android makes Microsoft more money”.  I suspect it’s a matter of time before one of the big players gets a bit annoyed with the liberties BGR takes in its headlines as compared to the sparsity of verified facts in the article content…

  • Steel

    Well how the hell are they supposed to make profits, innovation?

    Ballmer frowns on that.

    • Anonymous

      Isn’t something that is patented an innovation?

      • Droidman101

        Something that is patented could be patented many times and in many ways, but its just different approaches.
        You could patent the software to emails and troll with that, someone else the sending/receiving of it, and yet another for the storage of emails on a server. There’s no one patent for each “innovation”, its just that you’re the first person to patent a certain part of it, you don’t have to actually “make” it (google NTP)

      • Anonymous

        So, using your example, someone came up with a new way of doing something – doing sending/receiving or storing emails. Making or thinking of something that hasn’t been done before, isn’t it the definition of innovation?

      • Anonymous

        Microsoft spends about $9,000,000,000 (9 billion) a year on R&D. This money goes to people that think of something new and make it happen. Things they come up with are far more advance than a Send/Receive button – MS IP portfolio is very, very rich. Not every idea that MS develops can be easily commercialized and MS is not necessarily the first to find commercial application for it. This, however, doesn’t mean that if someone else came up with a viable commercial  product using your idea can simply take it, use it without you permission and “make” it into something.

  • http://twitter.com/Dirtball_Rotten Dirtball Rotten

    lolololololol microsoft is #gettingmoney !!!!!!!!!!!!!

  • Mattyfromma

    thats crazy i wonder what patent or technology HTC and other manufacturers are using making them pay microsoft $5 per android phone.  Its also funny that Microsoft charges $15 license fee for each of their phones, you would think they would lower that and offer better incentives for manufacturers to get windows 7 out there.

  • Anonymous

    If I was HTC, I’d stop making WP7 phones. 

    • http://www.twitter.com/wixostrix WixosTrix

      Why?  HTC still makes money from the device sales no matter what OS is running on them.  In fact they probably have a higher profit margin with WP7 devices because they don’t have to spend a much effort on optimizing the OS, developers, engineers, support calls, or legal costs because Microsoft protects their partners when they get into a sticky situation with their product, unlike Google.

      • Anonymous

        Sometimes, even in business, it’s more about the principle than the money. 

      • http://www.twitter.com/wixostrix WixosTrix

        Of course, but unfortunately companies don’t profit from principle. Keep in mind that technically, Microsoft or the other companies aren’t doing anything wrong. The governments granted them ownership of these patents with permission to persue anyone who used them without permission. These companies can let each other use each others properties, but the principle is, they own them (and paid for the patent submissions) and should require permission to use them. I own my cellphone but just because it’s a phone and you need to make a call doesn’t mean you don’t need permission from me first.

      • Droidman101

        And….wrong….they pay microsoft $15 for each phone sold just for using wp7′s source…has nothing to do with the actual porting of it

      • http://www.twitter.com/wixostrix WixosTrix

        I didn’t say there were no additional costs associated with licensing WP7 but they are probably far less costs than Android.

    • Anonymous

      That’s a knee-jerk reaction. If HTC is making money on WP7 devices, it would be foolish to throw that away because MS upset them.

  • Hank

    I got this from another discussion over on Giz I think. But it clears things up a little. (if true) *Thanks Captain Jack

    I think people are forgetting the big reason that HTC is paying Microsoft to License Android, and that is indemnity. Apple started going around suing everyone that made an Android phone with multi-touch, for various patent infringements including HTC. Google failed to step up to the plate to defend these manufacturers that were being sued for using Google’s operating system (Apple wasn’t targeting Google directly as they have much deeper pockets and a tenuous working relationship with Apple) Microsoft saw this and stepped in with the various multi-touch patents they have in place as well. They informed any manufacturers that anyone licensing their OS would be provided indemnity from IP lawsuits, as Microsoft would pay their legal defense and come to their aid in patent suits that came as a result. HTC saw this as a cheap way to license patents and protect themselves from Apple’s lawyers and they have been paying for a Windows Phone 7 License for every Android device ever since. So ultimately Android was infringing on both MS and Apple’s patents. It became cheaper to just pay MS and have them reduce your risk from Apple.

  • http://samsunggalaxys2blog.com/ Alejandro

    5$ per android HTC even ??

  • http://twitter.com/ocdtrekkie Jake Weisz

    And here’s what’s wrong with the US intellectual property law, folks!

    • Anonymous

      Because you know for a fact the suit had no merit? I’m sure HTC appealed, which means multiple courts felt MS’s patent was legit. 

      Next time you spend money developing a piece of software and patent it, and then someone steals your IP, I’d like to see you keep the same stance.

  • Anonymous

    You know, this is quite surprising since Windows Phone’s apps are pricier.

    • Droidman101

      He didn’t calculate apps…
      Nor did he calculate the money needed by microsoft to create WP7 nor the lawyers fees…

  • Droidman101

    Patent trolling pays…
    NTP earns all their profit and microsoft earns millions from either suing for patents or licensing their patents out…

    • Anonymous

      So every time a company files a patent-based lawsuit or negotiates a patent license, it’s patent trolling?

      You’re drinking too much of the internet kool-aid.

  • Anonymous

    There is a difference between patent trolling and getting what you deserve when people decide to take your ideas and/products and sell them as their own.

    • Anonymous

      MSFT IS patent trolling, CHEAT and robbing monies from android device makers than other tablet/ cell phone makers.  I predict that Msft’s WP7 will  receive the great *PUNISHMENT* &  DOOM in the little million pieces. it wont recovery FOREVER.  watch out!

      • Absolutely Certain

        I kind of thought that that was what Apple do

      • Absolutely Certain

        You might like to read the following before spreading your crap

        I think people are forgetting the big reason that HTC is paying Microsoft to License Android, and that is indemnity. Apple started going around suing everyone that made an Android phone with multi-touch, for various patent infringements including HTC. Google failed to step up to the plate to defend these manufacturers that were being sued for using Google’s operating system (Apple wasn’t targeting Google directly as they have much deeper pockets and a tenuous working relationship with Apple) Microsoft saw this and stepped in with the various multi-touch patents they have in place as well. They informed any manufacturers that anyone licensing their OS would be provided indemnity from IP lawsuits, as Microsoft would pay their legal defense and come to their aid in patent suits that came as a result. HTC saw this as a cheap way to license patents and protect themselves from Apple’s lawyers and they have been paying for a Windows Phone 7 License for every Android device ever since. So ultimately Android was infringing on both MS and Apple’s patents. It became cheaper to just pay MS and have them reduce your risk from Apple.

  • NoLo

    Ok this may be a stupid question but why does htc have to pay microsoft for putting android on it’s phones? isn’t android a google operating system?…

  • http://twitter.com/jaidedfocus LaRon Yancey

    So Microsoft cannot make money off of it’s own OS and phones so they make it off of HTC and are now trying to go after other manufaturers.  Smart move.

  • Whocare

    The future is not on the phone itself, is the sale on apps..

  • Anonymous

    Not saying much since Windows Phone has cost billions and hasn’t made a penny.
    not one single penny.

    • Absolutely Certain

      Links?

  • http://www.techendeavour.com Aggarwal Rahul

    As far as the irony of the
    situation goes, its perfect to have earning with Androids, the competitors of
    the MS being a source of revenue generator is a rare case in business enterprises.
    The MS is a power house of talent that creates the most valuable technologies
    that is a necessary to all kinds of users.
     

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