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Microsoft's Android patent ransom to 'total $444m' next year

Goldman Sachs guestimate shows peanuts for patents

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A report from the technology analysis team at Goldman Sachs estimates that Microsoft will suck up $444 million in Android royalties over the coming financial year.

The group estimates that Microsoft will make between three and six dollars per device, after signing patent-protection deals with smartphone and tablet manufacturers, according to Business Insider. Samsung was the latest manufacturer to sign up with Microsoft, with HTC joining in April 2010. Now Microsoft is focusing its efforts on Motorola, which next year may be owned by Google.

Redmond tells The Register that the mathematics used in the calculations were Goldman’s own and it wouldn’t be commenting, but it’s possible that Goldman Sachs has underestimated the amount of money Microsoft makes. When Samsung was in negotiations last year, royalty payments were reported as being around the $10 per handset.

However, the money is still a drop in the ocean for Microsoft, considering it made almost $70 billion in revenues last year. While $444 million will fund a lot of developer hours, Microsoft has plowed many multiples of that into the Phone 7 mobile OS, and still has to settle for just aiming for third place in the market, let alone achieving that status.

Nevertheless, any manufacturer looking to use the Android handset now seemingly has to factor in a payment to Microsoft for the permission to use technology to which it claims it owns the patents in order to escape prosecution. This will add to the cost of handsets – but considering that Android smartphone sales are currently beating Microsoft’s like the proverbial red-headed stepchild, El Reg suspects that manufacturers will learn to live with the patent surcharge. ®

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