Microsoft's cross-licensing deal with Samsung, in which the latter will pay undisclosed royalties for its Android tablets and smartphones, represents a seismic shift in the already-tumultuous smartphone space.
Microsoft now has licensing agreements with two of the top Android manufacturers, HTC and Samsung. Although the financial terms of these partnerships are never publicly disclosed, Microsoft stands to gain quite a bit from its deal-making: A new research note from Goldman Sachs (as paraphrased by Business Insider) suggests that Microsoft could earn some $444 million from Android licenses in fiscal 2012.
However, others dispute that number. "Goldman Sachs' estimate of Android patent royalties collected by [Microsoft] is not serious analysis but more like reading tea leaves, at best," patent expert Florian Mueller tweeted Sept. 29. In a posting on his FOSS Patents blog the day before, he reiterated rumors that Microsoft had asked Samsung "for $15 per device and Samsung was trying to move the amount closer to $10," while reiterating that "none of this is verifiable."
If Microsoft's victory streak continues, it could make things more complicated for Android. Microsoft and Motorola Mobility are locked in a vicious legal battle over patent infringement, a set of court cases made more complicated by Google's decision to acquire the handset manufacturer for $12.5 billion.
Google sent a Sept. 28 statement to TechCrunch characterizing Microsoft's legal maneuverings as an attempt to "extort profit from others' achievements and hinder the pace of innovation."
Frank Shaw, Microsoft's corporate communications lead, tweeted a short response: "Let me boil down the Google [statement] they gave to @parislemon from 48 words to 1: Waaaah."
Brad Smith and Horacio Gutierrez, Microsoft's general counsel and deputy general counsel, used a coauthored Sept. 28 posting on the Microsoft on the Issues Website to spin their company's strategy in the best possible light. "These agreements prove that licensing works," they wrote. "They show what can be achieved when companies sit down and address intellectual property issues in a responsible manner. The rapid growth of the technology industry, and its continued fast pace of innovation are founded on mutual respect for IP." In turn, they added, intellectual property "incentivizes" research and development.
For Microsoft, more licensing deals means it potentially profits in two ways from smartphones: Android licenses, and sales of Windows Phone. As part of its deal with Microsoft, Samsung indicated it would collaborate on development and marketing for Redmond's smartphone platform. That could be a harbinger of things to come, with companies more amenable to embracing Windows Phone as an alternative platform if Android ends up costing them extra headaches and money.
But whether Windows Phone enjoys greater adoption as a result of Microsoft's Android maneuvers remains to be seen. Microsoft is currently pushing its latest smartphone update, Windows Phone "Mango," in a bid to strengthen its competitive stance against not only Google Android, but also the Apple iPhone.