Phones

Microsoft Reportedly Nets Nearly $800M from Android Royalties

If you're looking for where Microsoft's mobile revenue come from, don't look to Windows Phone. Instead, look to Android, where Microsoft has received $792 million in patent royalties from just two companies in a single quarter, Samsung and HTC, according to the analyst firm Trefis.

The Boy Genius site reports that analysts at Trefis provided those numbers. They based them on estimates that HTC pays Microsoft $10 per Android device in patent royalties, and Samsung pays between $10 and $12 per Android device in patent royalties.

It's hard to know how accurate those numbers are. Back in October, 2011, Goldman Sachs estimated that Microsoft would get $444 million in those fees for all of 2012. Android sales have picked up significantly since October, so the Goldman Sachs figure could well be off.

Also keep in mind that the $800 million is for only HTC and Samsung, and doesn't take into account the many other deals Microsoft has to get royalties for Android devices. Back in October, Microsoft General Counsel Brad Smith and Microsoft Deputy General Counsel Horacio Gutierrez wrote in a blog that at that point Microsoft had patent deals in place that brought in royalties for more than half of all Android smartphones sold in the U.S.

As for Windows Phone sales, they're still slow, despite what seems to be a recent breakout quarter. The good news for Windows Phone is that Canalys reports that sales grew by 277 percent in the second quarter of this year compared to a year ago. The bad news is that despite that. sales were only 5.1 million units, compared to 107.8 million for Android, according to Canalys.

Of course, Microsoft gets a cut of those Android sales. Still, innovation, not litigation, is the way that tech companies grow, so Microsoft would be much happier if it were getting its money from Windows Phone sales, not from patent royalties.

Preston Gralla is a contributing editor for Computerworld, and the author of more than 40 books, including "How the Internet Works," "Windows XP Hacks," and "Windows Vista in a Nutshell" and "NOOK Tablet: The Missing Manual." You can follow him on Twitter or Google+.