Microsoft: More Money from Samsung Than Skype, Windows Phone and Xbox Combined | Hacker News Reader

Microsoft: More Money from Samsung Than Skype, Windows Phone and Xbox Combined

gizmocrazed.com

59 pointsjmngomes29 comments

This article is a badly rewritten ripoff of a much better article written two months ago:

https://news.ycombinator.com/item?id=8412349

Good and bad in this article:

Contextualizing the $1 billion in royalty payments across other business lines is useful. Though a comparison with its net financials would be more appropriate. Microsoft's revenues in 2014 were $86.8 billion, net income $22.1 billion.

Devices and Consumer were $37.7 billion, of which $18.8 billion were licensing, the remainder being hardware (computer and gaming, phones, other), and "other". Commercial revenue was $49.6 billion, with $42.0 billion in licensing (OS desktop and server, Office, and commercial Cloud products).

http://www.microsoft.com/investor/reports/ar14/index.html

So, yes, Samsung's contributing a lot in some business lines, but comparatively little (yes, a billion dollars is comparatively little) overall.

This does highlight the challenges Microsoft has had in expanding beyond its traditional desktop and small server markets. But those markets continue to serve the company very, very, very well.

In the "bad" category: the assumption that patents are valid and that innovation elsewhere somehow "owes" Microsoft. The long, long history of patents and patent abuse suggests that this isn't the case, but that a large trove of patents is effectively a potent weapon and threat to wave around -- its primary benefit is in being able to proclaim "not doing as we request of you is going to prove hugely expensive to you", in a "lovely business you've got here, it'd be a shame if anything were to happen to it" kind of a way.

But an interesting (if still insufficiently contextualized) factoid.

It's not little. Licensing is mostly profit, while "hardware" is mostly cost.

Remember for the first two or three Surface tries, Microsoft was losing money even if it had a "billion in revenue" from them.

Little from who's perspective?

For Microsoft, it's little -- and most of Microsoft's revenues are from licensing, though principally of software.

For Samsung, with $307 billion in income and $30 billion in profits, it's still a relatively small share of costs.

http://www.bloomberg.com/news/2014-05-12/samsung-invests-in-...

You should probably consider the investment in R&D to invent the licensed IP; it's probably less profitable once you include all of the R&D Microsoft has ever done.

With lawyers like these, who needs customers?

I know it's pretty popular to bash Microsoft and patent trolls, but could this possibly be a valid and licensed use of patented technology?

If you're of the opinion that none of this "technology" should be generally patentable, and Microsoft didn't go near the creation of any of the software involved in Android (Arm device drivers for customized linux kernels? Java ecosystem stuff? Some existing and many custom linux userspace pieces? Cellular phone stuff?), then the situation is ridiculous.

I suppose the difference that I see here is that Microsoft is making phones and tablets, as opposed to patent trolls that don't even plan on leveraging the patents they own. But yes, I agree that that probably most of these patents should be considered too general to be considered unique inventions. "Slide to unlock" comes to mind.

And they were risking money on handheld devices and tablets since the 1990s, years before Samsung got in the game.

The WindowsCE software stack is where these patents probably come from.

I had one of these http://www.computinghistory.org.uk/det/13994/Ericsson-MC12/

I would say it depends on the nature of the patents in question. If the knowledge described in the patents directly helped Samsung build a product then it might be legit. If, however, the end product in an Android phone would have looked the same without the patent being published, then it treating knowledge like physical property -- whoever staked a claim first gets exclusive use of it, regardless if others can independently discover the same thing. This in my opinion is more harmful then useful. Kind of like if someone owns a rectangular piece of land that was 2.3 acres, then they automatically own all parcels of land that are rectangular and 2.3 acres.

In my view, this isn't acceptable. You have to think that if the patents were so valuable, Microsoft would be able to leverage them and create a phone that surpasses Android because Microsoft doesn't have to pay for all those patents.

What's wrong with doing both?

(I used a WinPhone for a number of years. It was a fine phone).

One company spends billions researching, building consumer products, getting feedback, developing software and interfaces for over a decade.

Another company (or two, or twenty) comes along, builds off of that and spends billions on advertising...

Isn't this exactly what patents ARE for?

I'm not sure you are correct in either of your claims. I would be surprised if MS spent billions developing the Android enabling technology. I don't think they were active in Java or Linux development or mobile in the time before Android. I've played with windows CE when I was young. Nothing like modern phones.

And I highly doubt Samsung simple took MS engineering and research output, slapped a Samsung logo on it, and advertised it heavily. I doubt anybody would really think that either. Which begs the question...

It's easy to act as if Google, Apple or MS came up with obvious solutions... Samsung, Google, Apple, HTC and Microsoft are very well funded and mature players. They all contribute a lot to technology, If they have a valid patent, it deserves to be protected. It's not like any of those players is sitting and not using their funds to research more. This is what these companies do. Edit: spelling.

We don't know which patents are being licensed, so we can't say.

No. Microsoft is just the most effective "patent troll" of them all. I'll never forget how Microsoft got all OEMs to pay. They went after Samsung, convinced them through some kind of deal to pay up (which may have even been in Samsung's favor - think Windows discounts or whatever) and then showed all the other companies "look who we got to pay up for infringing on our patents. If big ol' Samsung paid up - do you really want to risk taking you to Court?" It was a classic patent troll move.

But people (including Congress,etc) tend to give them a break because they not an NPE, and are also a "big tech company" that "invents stuff", regardless of whether these patents from which they make billions a year by harassing Android OEMs using open source software are COMPLETE SHIT. They were so useless, Microsoft agreed to pay B&N $300 million to stop the lawsuit and settle with them, because they were about to invalidate some of their most "valuable" patents they were using to threaten others.

It was the same with Apple's patent war. Apple has lost most of the lawsuits it started throughout the world, because the the patents it was using to scare others into paying them were crap. But people gave them the benefit of the doubt because they are "an innovative company" or something, so using crap patents to rent-seek or ban other competitors' products from the market must be ok then.

My point is the patents should be judged at face value, whether they are valuable or crap. It shouldn't matter if it's a big company using them or even an NPE (which could actually be a university that just researches technology). The value of the patent should matter much more than who's owning it.

This is also why I don't buy the whole "new Microsoft" PR facelift thing. Show me Microsoft truly changed, by stopping rent-seeking from other companies as a business model. Show me Microsoft is adding real security to its products and services, and doesn't create legal intercept technology for a service years before it even buys that service.

When Microsoft stops doing crap like that, maybe I'll start believing in this mythical "new Microsoft", that actually cares about users, quality products and not about screwing others over as a way to make money with bullshit legal tricks or by bribing government officials in certain countries to sell its licenses (speaking as someone who lives in such a country, and is seeing his ministers arrested over that now).

Someone like me who actually pays attention and knows who Microsoft really is won't be easy to convince otherwise just because they changed the UI of their desktop OS (this as an answer to people on HN who still post sometimes that they "don't understand why others still hate this new and hip Microsoft" - well that's why)

I still remember this, which was partly what inspired me to write a wishlist for Satya in the first place:

https://news.ycombinator.com/item?id=7281319

I wonder how much of that is the VFAT patent.

> Microsoft officially revealed in a legal filing a figure of 1 billion in royalties that Samsung pays each year.

And right there would have been a good place to include a link with more about this legal filing.

What about Apple? Do they license these smartphone patents or do they have some other kind of deal?

They have a cross-licensing deal that seems to be stricter about consumer-visible features.

http://www.theverge.com/2012/8/13/3239977/apple-and-microsof...

Ever since the big flap over Microsoft "stealing" MacOS and the idea of a GUI they've had some kind of cold-war era red phone to communicate about these issues.

I can't recall a single instance of Apple and Microsoft going to court over intellectual property since then. Their lawyers probably work it out long before it becomes public.

They're also participating in a number of patent pools together along with other organizations, so they're unlikely to get involved in a protracted legal battle.

What patent does ms own that makes it so pricey?

The list of patents was leaked:

http://betanews.com/2014/06/17/china-leaks-2bn-of-secret-mic...

From the end of the article:

> Well, here is something even more interesting that is also quite thought provoking all the same: the investigation of Chinese ministry of commerce revealed that Microsoft holds about 200 patent families that can be deemed essential for the construction of an Android smartphone.

So it seems to be more of a combined cost for patents rather than a singular expensive one.

This is just wrong... its a beautiful example of how messed up our patent system is, and how it hurts tech rather helping foster it.

Gee, that seems pretty reasonable.

Reply on news.ycombinator.com