Microsoft gets five bucks for every HTC Android phone
Analyst spills royalty payment beans
Buy an HTC smartphone and $5 of what you spent on it goes to Microsoft - even if you've just bought an Android device.
So says Citi analyst Walter Pritchard in a note sent out to investors today, according to Business Insider.
Microsoft announced the royalty payment deal - the result of a legal settlement - last year, but the amount the software giant receives was not made public. MS has alleged Android infringes its intellectual property, and has other smartphone vendors in its sights.
Pritchard reckons Microsoft is pursuing other Android handset makers for a royalty of $7.50-12.50 per device. HTC clearly got off relatively lightly by settling Microsoft's claims out of court.
According to market watcher IDC, HTC shipped 8.9m smartphones in Q1 - that's $44.5m straight into MS' bank account, if Pritchard is correct. That sounds a lot but it's small change compared to the $8.5bn cost of buying Skype, for example.
But if other Android vendors follow HTC, Microsoft stands to do better. Gartner, another market watcher, reckons 36.3m Android handsets shipped in Q1. That's 27.5m less HTC's contribution. At the low end of the range of royalty payments Pritchard suggests, that's $250m per quarter into MS coffers, including HTC's fees.
Take the upper end of the range - $12.50 per device and the total leaps to $388.25m.
That's based on Q1 2011 figures - almost all analysts and other observers expect Android shipments to continue increasing every quarter.
Microsoft can't be too forceful. If can't afford to overly annoy those vendors who're also selling phones based on its Windows Phone OS - they might just drop it, in a huff. Or they may trade lower royalties for a stronger commitment to WinPho - something Microsoft needs far more than even a few hundreds of millions of dollars in royalty payments. ®
The annoying thing
The biggest thing Microsoft are getting money for is VFAT support, which CRIPPLES a phone. You want to download a 4G file to your 32G MicroSD card? Sorry, VFAT32 won't support a 4G file.
The REALLY annoying thing is that there is no reason the phone couldn't let me put a real file system (EXT4) on the card, BUT for the fact the various phone manufacturers have needlessly constrained the software to only allow VFAT32, primarily to insure that if I plug my phone into a Windows machine, it will understand how to write to my phone. Since I could not care less about supporting Windows machines, LET ME USE A REAL FILE SYSTEM YOU BASTARDS!
I'd love to see somebody grow a pair, refuse to license VFAT, and just support real file systems.
TL;DR: money is to make the phones speak VFAT because MS won't let Windows speak EXT4.
reprise, from another comment:
"Microsoft are moving from annoying (very annoying) to dangerous now.
Are there no orbital weapons that need testing?"
Mainly in the USA
Those figures I imagine are for the US only? Since many USA patents don't apply to the outside world HTC does not really have to pay them for shipments to non-USA countries i'd imagine.
I hate patent trolls who really don't come up with anything revolutionary but rather just spew out on some paper and wait till someone makes something similar, then pounce, sue, win!.
Companies should just all together stop shipping anything to the USA and watch the economy there crash. Yeah yeah you say someone could take their place but that takes time. Maybe this would get the patent office to actually read the patent before rubber stamping it......
I seem to recall that ...
... the big idea was having a free/open market, that is, competition. Paying $5 / copy of Android to Microsoft cannot be good for that. This, in fact, reminds me of the MS deals from the 1990s where the only way of PC OEMs getting Windows (+DOS) for a not hugely inflated cost was to pay per PC sold ...
That is the first $5 of my money they will get.
...and the last.