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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 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.


“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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