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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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This article is over a month old, voting and posting comments is disabled

Still quoting two year old reports?
By datdamonfoo on 4/17/2013 1:47:31 PM , Rating: 4
quote:
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.


The link provided is almost two years old! Is there any CURRENT evidence that this is still true? If not, please stop pasting it into every Windows Phone article.




By TakinYourPoints on 4/17/2013 5:49:29 PM , Rating: 3
It is old data, but its also a safe conclusion when comparing the continued acceleration in Android smartphone sales compared to how relatively flat WP has been.

This isn't a judgement on quality, to be clear, just talking about sales numbers.


By k3v1nb1 on 4/20/2013 7:06:32 PM , Rating: 2
Imagine you have 10 friends. Imagine all 10 friends have a smart phone. How many have Apple, how many Android and how many Windows (sorry RIM my last die-hard Crackberry friend went Android).

Two years ago the projection of Windows Phone market segment was more optimistic than it is today!

Sometimes ancient documents are still relevant.


By nick2000 on 4/17/2013 1:56:20 PM , Rating: 3
They have always admired the credit card approach where you charge for every transaction. Short of that, they just want a cut of every piece of computing equipment sold. They were using exclusive contracts with PC manufacturers but regulators frown on monopolies doing that so now they found that the patent system is wonderfully screwed up and can be exploited! yeah! By the time you are done fighting patents 1-10000, it would be much much cheaper to settle and it's all legal! The Mafia would be proud.

It's all BS. I would be happy buying (for a small sum) an updated version of the OS every years (call it a yearly subscription) if I get something out of it, like Apple does with their OS updates I guess. Tech giants are great really: Apple is overprotective and Microsoft always seems to find the dubious ways to extract money.

And the patent system is completely broke. Is there anybody that uses the patent system to get ideas and license something? Software developers are typically told NOT to look at *anything* otherwise they could be accused of stealing "ideas" if the company gets sued. How is that for "fostering innovation"?




By Samus on 4/17/2013 4:36:34 PM , Rating: 3
They love the skim. And I'm not talking milk.


By mjv.theory on 4/18/2013 6:00:04 AM , Rating: 2
quote:
The Mafia would be proud.

M$ and Apple are the same scum. Steal it, patent it, lie about it and patent troll it.

They deserve to get squashed by a giant robot.


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%.


Goddamnit, Microsoft...
By FastEddieLB on 4/18/2013 6:13:09 PM , Rating: 1
This is the same bullshit that made me boycott Apple, and now Microsoft is in on it? I swear, if I didn't need Windows 7 to play my favorite games I'd be a permanent Linux user.




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