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You won't hear Steve Ballmer say "I love this DEAL!" but Samsung's agreement to pay licensing fees is a big win

"Under my thumb
The girl who once had me down
Under my thumb
The girl who once pushed me around."

-- Mick Jagger and Keith Richards of The Rolling Stones, 1966

The iconic track by The Rolling Stones comes to mind as news of Microsoft Corp.'s (MSFT) new licensing deal with Samsung Electronics Comp., Ltd. (SEO 005930) broke today.  After all, Samsung is top seller of smart phones powered by Google Inc.'s (GOOG) Android OS, which quite literally has Microsoft's Windows Phone 7 smart phone OS down in sales.

But as much as Android has pushed Microsoft around in the market, Microsoft now has Android exact where it wants it -- under its thumb.  It announced [press release] today that after negotiations, Samsung had agreed to enter an intellectual-property cross-licensing agreement.

The old saying goes "you'll attract more flies with honey than vinegar".  While Microsoft's licensing pressure might not seem so sweet to some, it's at least a gentler approach than Apple, Inc. (AAPL), which has sued [1][2][3][4][5][6][7][8] the top three Android manufacturers (Samsung, HTC Corp. (SEO:066570), and recent Google acquisition Motorola) seeking to ban their handsets sales with nary a mention of a licensing settlement.

Indeed Microsoft's approach won over HTC, who was facing a lawsuit from Apple at the time, and now has won over Samsung, the fastest growing handset maker on the market, and the top maker of Android smart phones.

Reportedly the HTC deal was worth $10 USD per handset sold.  For the Samsung deal Microsoft reportedly offered a $15 USD per handset fee, while Samsung countered with a $10 USD per handset fee.  It seems likely that the pair met in the middle with a $12-13 fee.

Samsung and HTC both make Windows Phone 7 handsets, though, those devices haven't sold anywhere near the number of units as their flagship Android devices.

Of Android's "big three", only Google subsidiary Motorola remains without a licensing deal for Microsoft's intellectual property.  The Wall Street Journal is reporting that Microsoft used the announcement as a chance to issue a request/threat to Google/Motorola pressuring it to license.

For Google the situation could be worse.  It still will likely be able to turn a profit on its handsets and it will be free to focus on Android's other legal foes like Oracle Corp. (ORCL) (who is suing Google for Android's use of Java) and Apple.  But it's also not a very pleasant situation as Microsoft's licensing fees tack between $10 and $15 in additional costs onto each handset sold.  Those costs make Google's platform less attractive and competitive offerings more attractive.

Microsoft's Windows Phone Division President, Andy Lees, gushed about the deal, commenting, "Microsoft and Samsung see the opportunity for dramatic growth in Windows Phone and we’re investing to make that a reality. Microsoft believes in a model where all our partners can grow and profit based on our platform."

And Samsung tried to spin the news enthusiastically, with Samsung mobile devices global marketing VP Dr. Won-Pyo Hong remarking, "Through the cross-licensing of our respective patent portfolios, Samsung and Microsoft can continue to bring the latest innovations to the mobile industry. We are pleased to build upon our long history of working together to open a new chapter of collaboration beginning with our Windows Phone "Mango" launch this fall."

However, make no mistake, Microsoft is the winner here, and at the end of the day Google, and to a lesser extent, Samsung, are the losers.  Sure Microsoft would love Windows Phone 7 to be the kind of ringing success it thus far hasn't been.  That would give it all sorts of auxiliary revenue streams -- say from data mining and app sales.  But at the end of the day Android succeeding is almost as valuable to Microsoft, as it will get a sweet licensing cut of virtually every Android device sold -- without having to go to the hassle and expense of actually designing, advertising, and selling the product.


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RE: Nobody loses.
By Pirks on 9/29/2011 12:01:11 PM , Rating: 1
quote:
why they have always been the bigger company
Yeah, have always been, until these days when Apple's profits and revenues are bigger than MS's. Where have you been Reclaimer? Sleeping in a cave or something? Time to wake up and smell the ashes - Apple does not beat MS ONLY BY MARKET CAP anymore, it beats MS by a few other important metrics too.

No wonder Swash is laughing at us techies. It's because such delusional individuals as Reclaimer keep posting same old lunacy about MS being the "biggest". C'mon Reclaimer, stop putting us all in shame! Wake. Up.


RE: Nobody loses.
By cjohnson2136 on 9/29/2011 12:25:52 PM , Rating: 3
I don't think he means bigger as size of money. I think he means bigger like "you're the bigger man" by not stooping to their level.


RE: Nobody loses.
By Pirks on 9/29/2011 12:53:43 PM , Rating: 1
Yeah well Apple behaves like a creative pro - imaginative, ego obsessed and hysterical. Those types you know create cool music, paintings, they smoke pot, eat shrooms and are fun people in all but they are not your typical investment banker type of people.

MS is the opposite - not creative, not hysterical, no paintings, no design, no music, no cool stuff, no shrooms - it's all 100% boring suits with Windows, Server, BI, SharePoint, Word, presentations, slides, pie charts, profits reports... yawn *dozes off for a sec* ... yeah what I've been talking about? Ah, right, MS DNA. See how these guys are very different now?

When Reclaimer claims that bean counters and pie charters in MS are somehow "bigger" than hysterical creative shroom eaters in Apple - he looks like an idiot. Why? Because bean counter is not bigger than the artist, and vice versa - an artist is not bigger than a bean counter. These are just DIFFERENT personality types and we need them BOTH for proper balance in the world. Got it?


RE: Nobody loses.
By cjohnson2136 on 9/29/2011 1:05:17 PM , Rating: 2
I understand that as well. But Reclaimer is referring to the issue or license vs sue until banned.

In which case Apple is taking the effort to ban its competition where Microsoft is making money of it's competition. To me it seems like Apple is throwing a temper tantrum instead of thinking of it from a business sense to where they could make money of the situation. If MSFT and Apple where to license all Android makers to the point where it is not profitable they could take Android down that way. Which to me makes more sense instead of spending millions on lawyers.

And honestly everything you mentioned is all a perspective thing honestly creative paintings and stuff like that bore me, I could care less about what something looks like. I like to look at the code to see how it works. I have tried to look at iOS and Objective-C just have not had much time to do it.


RE: Nobody loses.
By Pirks on 9/29/2011 1:22:52 PM , Rating: 2
To me both approaches are valid. MS would sue or negotiate and get direct money infusion. Apple would just ban the infringer and get more sales this way, i.e. indirect money infusion via increased sales. I don't see any advantages of one approach over the other, they both look very similar to me. I think Apple and MS are both free to follow the approach they choose for themselves and we can't judge them. They are free businesses and are allowed to do anything within the frame of law. Why bother bashing Apple for following money making approach they chose? It's not any better or worse than MS's approach. Looks like only the dumb anti-Apple trolls bash Apple's approach. Because they are dumb trolls, not because Apple's approach is really bad or something


RE: Nobody loses.
By cjohnson2136 on 9/29/2011 1:27:12 PM , Rating: 2
See my feelings would be not to limit competition through court cases but limit them by forcing them to increase prices. I would agree that both are valid but I just simply explaining what I thought Reclaimer meant by bigger because you started talking about numbers.


RE: Nobody loses.
By Reclaimer77 on 9/29/2011 4:29:44 PM , Rating: 2
quote:
Apple would just ban the infringer and get more sales this way, i.e. indirect money infusion via increased sales. I don't see any advantages of one approach over the other, they both look very similar to me


Because you're an idiot? Android will NOT get "banned". That solution is costly, creates huge consumer backlash, and is destined to fail. Plus it limits MY choices as a consumer and drives up prices, so why would I support such an action?

The idea that you think forcing consumers to buy your product has ever worked is amazing to me. Or that it's a solid plan of action. Working against the free market can only work if you're selling something like oil. iDevices aren't oil, nobody NEEDS one. So you're just supporting some draconian measure and applying moral relativism to it. Dumb and dumber.


RE: Nobody loses.
By Pirks on 9/29/2011 5:39:22 PM , Rating: 2
quote:
Android will NOT get "banned"
No, you're an idiot, 'cause I never said anything about the whole Android thing being banned, I meant just a few infringing devices, like those from Samsung, that's all.
quote:
That solution is costly, creates huge consumer backlash, and is destined to fail
Not in the case when you try to ban just a few devices, like Apple does.
quote:
it limits MY choices as a consumer and drives up prices, so why would I support such an action?
Police office on a street arrested a guy selling counterfeit watches. His actions limited your choice and drove up prices, since now you can't just choose between cheap clone watch from this guy and an expensive one from the store. Now you have to go to the store and pay their price. Yeah, too bad man, I feel for you. Less choice, higher prices. Right. Those nasty police officers eh? :)

Of course you will NOT support such an action. What a surprise, doh!

But I wasn't talking about YOU. I know YOU and many other consumers like you will NOT support such an action. Genuinely consumers are not interested in many decisions that benefit businesses, such as, for example, installation of the break-in alarms. Why? Because installing such an alarm in a business makes it harder for the thieves to steal the goods and resell them for low prices. Also it increases the goods prices because business now has to include the alarm price into the goods price to pay for it.

Of course YOU and people like you will benefit from businesses not installing alarms, police not catching counterfeit goods sellers and so on.

Remember though that I've been discussing the business view, not your view. If you stop smoking your crack (see my message about MS split below) you should realize that there are many things that are good for consumers and bad for business, and vice versa. Try to look at it from the businessman point of view, could you do that for me please? :)
quote:
The idea that you think forcing consumers to buy your product has ever worked is amazing to me. Or that it's a solid plan of action
This plan always works when store owner reports counterfeit goods seller on the street to the police, and police essentially forces consumers to go buy goods from that store because they arrest the counterfeit guy and remove his goods from the street. Tell me, if this plan always works for other stores, why will it NOT work for Apple store eh?
quote:
Working against the free market can only work if you're selling something like oil
Working against the law can work quite well sometimes, if you're selling stolen/counterfeit goods, so what? Doesn't mean it ALWAYS works, this is pretty risky business you know.
quote:
So you're just supporting some draconian measure and applying moral relativism to it
Yes, I support draconian measures when police is dealing with clone makers on streets, so what? Why is this bad? Because it drives prices up and leaves YOU the consumer less choice? Sorry man, I think the law is ABOVE your convenience, your choice and your freakin money. It's even above me and my money. And my choice too.

Yeah I'm that bad and relativistic as you say. Deal with it.


RE: Nobody loses.
By Reclaimer77 on 9/29/2011 4:22:13 PM , Rating: 1
You really are a moron. You think Apple, who's entire existence relies on consumer devices, is "larger" than Microsoft simply because they are more profitable? Microsoft's patent portfolio alone dwarfs Apples. It's worth on the open market is incalculable. Microsoft develops operating systems and business solutions relied on by the entire world. You're beloved Apple makes a phone and a line of PC's that nobody buys running an OS almost unheard of in the business sector, congratulations.

Microsoft was split in HALF by the Federal Government and is still the worlds largest software developer, technology innovator, and business partner. The world as it is today could absolutely NOT function without Microsoft. They have made themselves utterly indispensable.

And you think Apple is "bigger"? I swear the value you morons place on disposable consumer devices is absurd. You and Tony talk as if we simply cannot exist without iDevices. Look around! Apple is in an extremely volatile market with competition closing in all around them. Just how long do you honest think they are going to be able to ride this high?

quote:
No wonder Swash is laughing at us techies.


Swash laughing? More like crying himself to sleep. The guy is an idiot and for you to put him in a favorable light shows how typically backwards you are.


RE: Nobody loses.
By Pirks on 9/29/2011 5:10:30 PM , Rating: 2
I see you love to argue with Big Money. Be my guest. No matter what you say about HUGE MS and tiny Apple who no one cares about - Big Money still says Apple makes way more money than HUGE MS.

You can argue with money and numbers all you want, but no analyst or investor will pay attention to all your crying and whining. Wall Street and industry see the mighty Apple with trucks and trains of money, and they see the HUGE MS that has... smaller trucks of money. Oops.

They don't care about your hot air rhetoric with the world depending on MS to survive and human race and blah blah, they don't give a sh!t about that drama of yours. They only see past performance where Apple was growing leaps and bounds and outgrown even MS, and where MS was stagnating since 2000.

One company stagnates and makes lotsa money. The other is growing with no end in sight and makes even more money. And sadly no one cares about your drama with world depending on MS. Money talks, Reclaimer, money talks.

Keep arguing with money, you are just wasting your time. Money. Always. Wins.

Remember that.
quote:
Microsoft was split in HALF by the Federal Government
Are you on crack? Who split MS? When? Sheesh, get some sleep man... this is worse than I thought.
quote:
Apple is in an extremely volatile market with competition closing in all around them
Yeah, Apple spent the whole life in this volatile market with competition closing in and stuff, so what? Did this hinder their ability to raise above the others? Not at all. So I don't see your point then. What was it?


"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation














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