Microsoft Earning Money from Licensing Agreements, Samsung the Next Target

By Ed Silverstein July 07, 2011

Microsoft wants Samsung to pay $15 for every smartphone it manufactures that uses the Android operating system.

That may lead to a very large amount of money for Microsoft, according to media reports. The issue relates to Microsoft having patents which are utilized in the mobile platform, according to Reuters.

However, Samsung is expected to try to lower the payment to $10 per smartphone, as well as come up with a “deeper alliance with Microsoft for the U.S. company's Windows platform,” the Maeil Business Newspaper reported.

Mobiledia noted that Samsung is the second largest handset maker in the world.

Reuters also reports that Samsung sold approximately 19 million smartphones in the April-June quarter. More than 3 million Samsung's Galaxy S II smartphones were sold since the device was introduced in April, Reuters said.

VentureBeat estimated that if the 19 million smartphones each used the Android OS and Samsung was paying Microsoft $15 a phone, Microsoft would get a quarterly payout of $285 million.

And if the arrangement includes previous sales – including past Galaxy S 2 sales – Samsung could also have to pay approximately $45 million to Microsoft, according to Mobiledia.

Samsung is likely to become the top smartphone maker, replacing Nokia, which had the top position for about a decade, according to industry analysts quoted by Reuters.

Microsoft also developed a licensing deal with HTC, which gives it money for handsets using the Android OS. HTC will pay $5 for every Android device. HTC sold some 30 million handsets, which led to some $150 million for Microsoft, according to VentureBeat. Microsoft has entered into licensing agreements with over 700 companies since 2003, according to VentureBeat.

In a related matter, TechZone360 reported this month that Microsoft and Wistron Corp. have entered a patent agreement that provides for Microsoft to receive royalties from Wistron.

The deal relates to Wistron’s tablets, mobile phones, e-readers and other consumer devices using an Android or Chrome platform.

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Ed Silverstein is a TechZone360 contributor. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

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