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Samsung may pay as much as $10 per Android handset sold to Microsoft, in order to protect itself against Apple.  (Source: Cell Phone Blog)
Licensing fee could give Samsung extra legal ammo against Apple

Microsoft (MSFT) and South Korea's Samsung Electronics (SEO:005930) are reportedly engrossed in intense intellectual property licensing negotiations.  The talks bring to mind the old adage "the enemy of my enemy is my friend."

While Microsoft's Windows Phone 7 platform competes with Android, both platforms share a common enemy -- Apple, Inc. (AAPL).  As Apple tries to fend off Android, it has turned to multiple lawsuits, first suing [1][2] Taiwan's HTC Corp. (TPE:2498) (the top Android phone maker at the time) and then suing Samsung (currently the top Android phone maker).

As both Samsung and HTC are also WP7 handset makers, it behooves Microsoft on multiple levels to defend these quasi-rivals.  To that end, Microsoft entered into a patent licensing agreement with HTC last year.  HTC agreed to give Microsoft a fee for every Android handset sold.  In exchange it received the use of Microsoft's IP, which has proved a useful shield to hold back Apple's legal harassment.

Samsung, which has a sizable IP catalog of its own, may opt for a similar deal.  The current sticking point is the licensing fee.  Microsoft wants $15 USD per Android handset sold.  Samsung, reportedly, is willing to agree to around $10 USD per handset.

If the pair can reach an agreement, Samsung could use its new resources to further defend itself against Apple in court.  That would be good news for U.S. customers, who could lose access to Samsung's Android lineup if Apple succeeds in blocking imports from the Asian gadget maker.

Samsung will soon become the world's largest phone maker, passing Microsoft's Finnish ally, Nokia Oyj. (HEL:NOK1V).  The company is expected by analysts to have sold 3 million units of the Galaxy S II since its late April debut, helping propel the company to total estimated sales of 19 million units in calendar Q2 2011.



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19MM?
By wallijonn on 7/6/2011 11:24:31 AM , Rating: 0
Only 19 million units sold? If it were a console it would be deemed a failure.




RE: 19MM?
By bug77 on 7/6/2011 11:27:31 AM , Rating: 2
There are a handful of consoles to choose from. Smartphone models, a bit more. You're comparing apples and oranges here.


RE: 19MM?
By zozzlhandler on 7/6/2011 11:34:23 AM , Rating: 2
Consoles have much thinner margins or are sold at a loss, and make their money from games sales. Smartphone manufacturers make their profits from each handset sale (although the carrier sales of handsets have a very different profit model).

So consoles have a much longer lifetime and need to sell many more to achieve success (by selling many games per console sold).

Smartphone models may change as rapidly as twice per year, and (for the manufacturer) must be sold at a profit. So smartphones will have smaller manufacturing runs than a successful console, but are profitable at smaller runs.


RE: 19MM?
By MrTeal on 7/6/2011 11:37:19 AM , Rating: 3
And if it were a car or a oscilloscope it would be a resounding sales success. What's your point?


“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls














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