Comment by anon1385 | Hacker News Reader

Comment by anon1385 | Hacker News Reader

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.

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.

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.

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