Microsoft continues to profit off Android | Hacker News Reader

Microsoft continues to profit off Android

bgr.com

40 pointszacharye12 comments

Microsoft’s revenue from royalties HTC is forced to pay on each Android phone it sells is estimated to be between three and five times the company’s Windows Phone revenue, which could help explain why Microsoft has been so quiet to date when it comes to marketing its new mobile OS

I think the more important statistic is the profit Microsoft makes per Android device, compared with the profit per WindowPhone device. There are far more Android devices, so it's not surprising they make more from that "licensing" agreement (I'm loath to call it that when it's more like extortion). I find it hard to believe that MS would prefer (and make more money from) an Android dominated market compared to a WP7 dominated one, so I'm pretty skeptical of the idea that MS are holding back on WP7 because they don't mind Android dominating. I could be wrong though, maybe their Android licences really are that lucrative, and in that case God help us all because the software(-patent) industry is even more fucked than most of us ever imagined.

Supposedly they get $5 a handset out of HTC and between $10 and $15 a handset out of Samsung for Android. From what I have read MS gives WP7 to handset makers for free then makes money off the carriers for services provided like Live access. Technically they charge handset makers something but they give it back in advertising dollars, partnerships(i.e. Nokia) etc. Where as the Android money is pure profit.

My take on this: Microsoft is using a free market approach to Google's dumping of Android at a loss in exchange for manufacturer adoption.

Yes, they could try to litigate and pursue trade sanctions - but Viewsonic and the other companies are also Microsoft customers and B2B relationships aren't built that way. Microsoft's strategy is successful because licensing is clearly more certain than litigation and probably cheaper as well. Given that Microsoft leadership has a fiduciary responsibility to protect the companies IP vigorously, their licensing program is as much of win-win solution as is possible under the circumstances.

Determining whether or not reaffirming the cusomer-vendor relationship between Microsoft and the major device manufacturer's is a brilliant move in the long run, is left as an exercise for the reader.

I find it hard to reconcile the term free market with the monopoly status granted in a patent, but this is the system we have and MS would be wrong to not respond in this way. The goal here is to make Android uneconomic for handset makers, not to generate revenue.

Google can dump their OS on the market because their business model is different than Microsoft's. They make 98% of their revenue on advertising, so it is in their interest to commoditize the OS level and increase the adoption of internet-connected devices. MS makes virtually all their profits on the licensing of software, they need to protect that business and their core platforms.

Even concerns of immediate profit aside, MSFT will definitely see it as in their interest to have a strong Windows brand in the mobile handsets market.

The reason marketing has been quiet of late is more likely due to the impending release of Mango than any other concerns.

I think it's embarrassing for Microsoft to make more from bogus patents than from their own actual product. If I were them I wouldn't try to brag about it in the press. Heck, if I were them I probably wouldn't even do it in the first place.

This is why Microsoft have lost their way. Instead of focusing on their own products and innovation, they try to make money through other less honorable means. And sadly it runs deep into Microsoft's corporate culture.

Their actions as of late are making me reconsider whether I will want to use any of their new products in the future. They should realize that a lot of those Android users are also potential Microsoft customers for other products of theirs (desktop Windows, Xbox, Office, etc). They shouldn't try to piss them off with stuff like this, by extorting money from other of their favorite companies, especially when the way they do it is highly questionable.

> ... bogus patents ...

> ... honorable means ...

> ... extorting money ...

> ... highly questionable

Can you specify what do you mean? If the patents aren't valid, Google would surely have them canceled, wouldn't it? If they are valid MS are paid for their hard work or hard work somebody else did and they purchased it. Hardly "questionable".

I'm going to assume you're not trolling:

Fundamental problem with software patents today: usually it is much cheaper to pay than to invalidate bad patents.

It is also cheaper to pay than to try to invalidate good patents. The assumption that Microsoft's patents regarding Android are bad is an unsupported premise, and given Microsoft's purchase of Danger and Andy Rubin's close association with Android, their claims are meaningfully plausible on the surface.

Why must they be bogus patents? Microsoft isn't a patent troll, they are an actual technology company that produces and sells the tangible results of their patents. Even in the reform models some propose where only the inventors and producers can enforce patents, Microsoft would still have that right.

> This is why Microsoft have lost their way. Instead of focusing on their own products and innovation, they try to make money through other less honorable means.

Actually, Microsoft is innovating very much. They probably have one of the best (as modern/stable/useable) development environments and ecosystems. Their research is putting out great code and great products at a very fast pace. Plus, F#, a new-ish language, just entered TIOBE and it's the top functional language. WP7 and Windows 8 are huge leaps forward, and that's a great feat considering they're not copying Apple at all. Hell, most of the time I wish Apple would copy some things from WP7 and Windows 8.

Innovation isn't lost at all. It's just that Android isn't the underdog anymore. Microsoft is.

I, for one, welcome Microsoft, our new underdog.

EDIT: I know meta-posts aren't well regarded here, but why the downvote? I wasn't bashing Microsoft, or Android for that matter, and even provided some opinion as to why Microsoft hasn't ceased innovating (I could go on, btw). By calling it the "underdog" I don't think I'm being offensive, please, sorry about that plea, but I'd like to know...

It's important to note here that most of the revenue is from HTC and most of that is not specifically from Android but from HTC Sense which is a UI layer HTC puts on top of Android and which was actually funded in part by MS in the first place to use with Windows Mobile - hence why they feel entitled to royalties when it is used outside that OS.

So while it is correct to say that the money is coming from "Android phones", it's a bit misleading to say it is coming from "Android" per se - this is a HTC Sense / MS specific thing.

Of course there are other non-HTC-sense patents too, but they are a much lesser part of the deal.

Reply on news.ycombinator.com