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Top Taiwanese manufacturer Hon Hai is latest Android ally to cave to Microsoft's license-or-be-sued threats

While Microsoft Corp. (MSFT) has struggled to convince top manufacturers to turn away from Android and embrace its Windows Phone platform, the technology giant has successfully executed a strategy to ensure that its getting a cut of the revenue from every Android device sold.

Threatening to sue OEMs with its massive software patent portfolio, Microsoft has pressured top Android OEMs like HTC Corp. (TPE:2498) and Samsung Electronics Comp., Ltd. (KSC:005930) into licensing payments of $10 or more per Android device sold.

The latest begrudging "partner" is top Taiwanese manufacturer Hon Hai Precision Industry Comp. Ltd. (TPE:2317), who owns the Chinese manufacturing subsidiary Foxconn.  While Foxconn is perhaps best known for its manufacturing relationship with Apple, the company is also contracted by OEMs to manufacture their Android devices.

Microsoft announced on Tuesday that Hon Hai had agreed to pay it undisclosed Android royalties.  The arrangement will serve to protect Hon Hai's OEM partners from lawsuits.

Foxconn Workers
Electronics giant Hon Hai has agreed to pay Microsoft royalties on Android devices it manufactures, protecting its OEM partners.  [Image Source: Telegraph UK]

Sony Corp. (TYO:6758) and Dell, Inc. (DELL) are among the companies to use Foxconn for part of their Android production needs.  Foxconn rival Quanta Computer, Inc. (TPE:2382) -- another contract manufacturer used by Sony -- has been paying Microsoft royalties on Android devices since at least 2011.

Vincent Shih, chief legal officer at Microsoft's Taiwan outpost brags that over half of Android manufacturers now license Microsoft intellectual property.  Previous reports have indicated that Microsoft is making far more money from these licensing agreements than it is is off its own smartphone product, Windows Phone.

Among the top companies to try to fight Microsoft's licensing threats have been Google Inc. (GOOG) subsidiary Motorola Mobility and Barnes & Noble Inc. (BKS).  Barnes & Noble -- perhaps the most vocal critic of Microsoft's threats -- caved in April of last year, "partnering" with Microsoft and agreeing to pay royalties.

Google/Motorola -- whose legal counsel compared Microsoft to a "deranged Easter bunny" -- is still fighting the good fight when it comes to patents.  However, the company faces a major judgment day this Friday in Germany.  If it loses, it may see its handsets not only banned, but also seized and destroyed.  Some experts believe that a loss in Germany could force Google to swallow its pride and agree to licensing after long encouraging OEMs to fight Microsoft's demands.

Source: Microsoft [press release]



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HTC...
By kmmatney on 4/17/2013 5:12:28 PM , Rating: 2
I wonder if makers of Windows 8 phones get a break. Also, does Microsoft charge for the OS, or is it free like Android?




RE: HTC...
By sprockkets on 4/17/2013 10:29:30 PM , Rating: 2
MS charges for the OS.

But get this: They pay Nokia $1 billion dollars a year to use WP, and they are 80% of the WP market. It is assumed Nokia receives more than it pays in licenses.

WP has gained market share from like 1% to 3.2%.


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