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Top Chinese phonemaker will pay Microsoft royalties on its devices

And then there was one less.

I.  ZTE Caves to Licensing Demands

On Tuesday, Microsoft Corp. (MSFT) VP and general counsel Horacio Gutierrez posted that his company had successfully coerced... er... convinced top Chinese Android smartphone maker ZTE Corp. (SHE:000063) to pay royalties.  The news comes hot on the heels of Microsoft's announcement that top Taiwanese manufacturer Hon Hai Precision Industry Comp. Ltd. (TPE:2317had agreed to licensing.  Hon Hai owns the Chinese manufacturing subsidiary Foxconn.

In his commentary Mr. Gutierrez comments that Microsoft pays for licensing all the time, just like it's forcing OEMs to.  He writes:

Much of the current litigation in the so called “smartphone patent wars” could be avoided if companies were willing to recognize the value of others’ creations in a way that is fair. At Microsoft, experience has taught us that respect for intellectual property rights is a two-way street, and we have always been prepared to respect the rights of others just as we seek respect for our rights. This is why we have paid others more than $4 billion over the last decade to secure intellectual property rights for the products we provide our customers.

ZTE will pay Microsoft on every handset it makes. [Image Source: Reuters]

The licensing deal with ZTE is a big deal as the Chinese OEM is vying with Huawei Technologies Comp. (SHE:002502) for the title of the world's second largest Android phonemaker.

II. Licensing Remains Microsoft's Top Smartphone Cash-Driver

Nearly three-quarters of Android manufacturers now license Microsoft intellectual property.  Microsoft has pressured top Android OEMs like HTC Corp. (TPE:2498and Samsung Electronics Comp., Ltd. (KSC:005930) into licensing payments of $10 or more per Android device sold.

Reports from 2011 indicated that Microsoft is making far more money from these licensing agreements than from its own smartphone product, Windows Phone.  Given that Android growth has outpaced Windows Phone growth and Microsoft has scored many more royalty deals since then, it's relatively safe to say that situation remains even more true today.

Royalties are where the money's at for Microsoft. [Image Source: Life's Cheap Thrills]

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

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RE: die M$...please!
By Solandri on 4/24/2013 4:31:59 PM , Rating: 2
IBM was screwed by Columbia, Compaq, and pretty much everyone else when they all reverse-engineered the IBM BIOS, without copying a single line of code used (clean-room technique). Had they been granted a patent on the BIOS, the entire computer industry would be vastly different.

Or maybe not. The same thing happened with Betamax videotapes. Sony patented it up the wazoo and jealously guarded and restricted who could make it in an attempt to control the market. As a result all the other manufacturers switched to the easily licensed VHS format. And we all know how that turned out. Arguably the same thing is happening to Apple with the iPhone vs Android phones.

When there's strong demand, and a manufacturer tries to inflate prices by controlling supply, the market reacts by bypassing that manufacturer entirely.

RE: die M$...please!
By Shadowself on 4/25/2013 1:56:12 PM , Rating: 2
Arguably the same thing is happening to Apple with the iPhone vs Android phones.
You forget that Apple has a cross licensing deal with Microsoft over mobile device related patents. Apple did license many of its mobile device patents to HTC. Apple offered to license its mobile device patents to Samsung before any of the lawsuits started flying.

There are many people on this site who completely forget the things that Apple developed in house then put into the public domain: mini Display Port, Open CL, etc.

Is Apple faultless in all this? Absolutely NOT. There is more than enough blame for Apple. They are as guilty as any other company (and in a few cases more guilty) for pushing through patents that should NEVER have been issued -- and then trying to enforce them through litigation.

Because I refuse to look at Apple very narrowly I routinely get smacked on this site. But I insist on looking at Apple with respect with a healthy dose of skepticism.

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