Samsung-Microsoft licensing

Microsoft and Samsung reportedly are in discussions over licensing fees concerning the latter's Android smartphones. Reuters, citing "local media," reported that Microsoft was "demanding" $15 per smartphone. Samsung reportedly countered with $10 per phone in exchange for "a deeper alliance with Microsoft for the U.S. company's Windows platform."

And thus the world continues to work as it's intended to. It's important to note that just as when HTC started forking over licensing fees to Microsoft, we're talking Microsoft and Samsung here, not Microsoft and Google, or Microsoft and Android. OK, maybe indirectly. But there are countless lines of proprietary code in Android, and any number of ways that code -- or, yes, possibly code from the Android Open Source Project itself -- could infringe on another company's patents. Problem right now is that nobody's saying which toes are getting stepped on, just that there's pressure on the foot.

Source: Reuters

 

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Microsoft reportedly demanding $15 per Android phone from Samsung

49 Comments

I find it amazing that Microsoft is still in the PDA/Phone OS arena. It's something they've never been successful at, and probably never will. They should be grateful that Samsung even wants to make a Windows Mobile Phone.

Have you looked at WindowsPhone7 at all? I have an android and I love it and its hard to see myself switching to something else, but I have to say - WindowsPhone7 looks really nice. All those slick animations and buttery smoothness sure look like success to me. Hard to believe you've seen it if you say something like this.

From his mentions of "PDA" and "windows mobile" which no longer exists he obviously is not up to date on mobile tech.... not his fault.

Well if consistently loosing market share is success to you then I guess they are. By that logic the Titanic had a successful voyage because it was a big and buttery smooth ship.

MS did ok a few years ago but never really took off. WM was a goof from day 1.

Just another reason to hate microsoft as this will effect us in some way shape or form. Whether it be crappy proprietary trashware stuck on phones with apk's that cannot be uninstalled without consequence or lessening of android phones being made as the profit margin just isnt worth it. Either way M$ is doing what they do best and reaching into someone else' pocket to help push their inferior product forward...

Feels alot like being forced to purchase windows when buying a laptop, when I never plan on using windows for more then a simple rarely used VM...

I don't think it's about Windows Phone, but about patents they are saying they own that Android *might* infringe on. (and might have a leg to stand on, actually).

"Pay us now, and we won't sue you if we think you might be on our turf. "

And we will charge you more than what it costs you to license a WP7 phone! And this is where the extortion part come in. Bordering on Anti-Trust... FTC and DOJ are you listening?

Wouldn't this be considered extortion?

Microsoft can't create a decent mobile OS of their own (thanks to their own incompetence along the way) so they have to extort $$ from the android handset companies?

Extortion is a bit harsh, it's more like business model. They are still making money from one of the biggest player in the market, without having to be a big player.

They know they cannot compete with iphones and android devices, but they keep putting out phones with new patents just so that they can reap the benefits of others good fortune.

Mind you, as a great capitalist that I am, I find nothing wrong with this. It is their property, and they should be paid for it. I say shame on the manufacturers that are trying to use it without full disclosure. They ought to be trying to beat that that MS has done!

It would sit better if the patents were made known. Lets not put lobe for capitalism in front of common sense here. We don't know if Android is infringing on any patents at all because the companies signing agreements with them are also forced to sign an NDA along with it. So we can't assume that they are just being payed for their IP. They could very well be telling these companies to play along or face a software audit or a change in volume licensing terms that would cost way more than a few bucks off the top of their phones.

Harsh but accurate in this case as Samsung also licenses and produces WP7 phones. Microsoft is leveraging alleged patents on Android and other phone elements, to a) make money on a top tier product that they did not invent or create, and b) to corner the phone manufactures into producing and marketing more of their product, relative to the competitive product being produced. I'm with Motorola and B&N on this one. Tell M$ to sue as they are not going to be extorted for their slim profits. Google needs to "Man up," here and properly support the Android IP. As such they should indemnify any authorized company that uses Android in it's products. The fact that Google does not make any direct dollars from Android gives them some protection from this crap as there is no money to go after. Oracle is grasping at smoke filled mirage.

Microsoft has windows mobile phones??? I thought that ended back in the early 2000's? :-P

But seriously, I welcome MS to have their own device. IT is not an issue over software, though the variety is welcomed, but i see it more along the lines of hardware requirements....anything that MS puts out is super heavy and bloated (from Win 95 on). So the fact that there are still phone mfg out there willing to work with this can only mean good things for the phone development arena as whole...

Crey23,

The bootup resting Ram level of Windows 7 and current OSX is not that different. And when I used to have a macbook, Leopard was painful to use on 1gb of Ram too.

And before the iphone changed the game Windows Mobile was competitive.

Dude, don't get me wrong, I am an avid user and supporter of Win and MS products. I cannot stand apple as an overall answer to all our gadget needs. That said, Windows OS have always been rather heavy, compared to others primarily Linux OS.

I am not an apple fanboy in any way, shape, or form. I cannot buy a device that forces me to talk to a "genius" in order to get it fixed, much a company that makes set appointments for such fixes. I think apple is too full of themselves, and for that I prefer not to buy their products. I do own an iPod (5th gen from 5 yrs ago) that I seldom use....I've got my android for that!

Theres nothing unlawful about what M$oft is doing. That's why it is called negotiation instead of extortion.

That is for the ITC the DOJ and the FTC to decide. This is bully tactics at it's finest. Similar to the tactics used with PC makers a decade back. Push my crap over the competition's or we will ruin you.

why is this stuff ok and why don't large mega corps fight back?
can ford demand a fee for every car toyota makes that has 4 doors and drives on rubber tires like theirs? why can apple sue samsung for making a phone that has icons or a touch screen? can outback demand compensation from every other restaurant that sells a bloomin onion knockoff? how many watches, sunglasses, & purses have blatant knockoffs that no one seems to care about? obviously MS has to do something to make some money, but being a leech is such a sad & pathetic way to do it.
oracle suing google....ok, makes a little sense but for billions in damages? absolutely absurd
apple suing samsung/amazon....certainly not unexpected from apple but ridiculous nonetheless. I'm suprised they haven't sued MS for using fruit as their OS revision names since it would confuse customers who could only think all fruits are iphones.
If MS has such a trump card on this whole thing, why haven't they been able to truly succeed in the mobile phone arena. sure windows mobile did well enough before 'real' smart phones came along, but nothing compared to iphone/android.

Patent law as it pertains to hardware/software/UI, that's the way that it is. Probably not going to change anytime soon.

Nokia has loads of cellular patents, Apple had to capitulate and pay up. MS and Palm had patents going back a decade to the dawn of the cell phone era, bidding for Palm went up to $1billion as a result. There was that recent $4.5 billion paid for Nortel patents. HTC already pays MS for each phone, maybe that's why my non-rooted N1 needs a hard reset every couple of months.

i realize that's the way it is and it's certainly been going on for some time, but that doesn't make it any less absurd. i guess it's more on these other company's for not putting up a fight since patent laws will never be reformed.

"maybe that's why my non-rooted N1 needs a hard reset every couple of months" ROFL...Does the screen first turn Blue when this happens?

Wow, where to begin...

So Microsoft is truly on their seventh, yes seventh mobile os and they have been leaders since the days that Palm was a major player and styluses were mandatory. Their ability to innovate has always been slightly limited but through aquisitions their portfolio of intellectual property has grown at a steady rate. If Google had made the same purchases of small software companies to obtain these rights and started suing you probably wouldn't bat an eyelash.

So there are four major players bringing us mobile devices now and although each brings its own strengths and weaknesses this all is still fairly new, as far as contemporary designs go (hardware & interface). Working out royalties and licensing agreements comes with the territory.

And last but not least remember that the most important royalties story has yet to unravel... Apple was blessed with the patents to rule them all with the recent touch interface patents... that story is the one to watch with concern.

BTW- Though Apple uses an apple as their logo you might want to think before posting... All Apple OS updates refer to cats... ie-Leopard.

"If Google had made the same purchases of small software companies to obtain these rights and started suing you probably wouldn't bat an eyelash."

Wrong. I think all software patents are ridiculous. Microsoft does too, depending on the situation. Remember when they were sued by Apple over the "look & feel" of Windows? Microsoft won that legal dispute with the judge determining that you can't patent the natural evolution of interfaces, e.g. windows and trash cans.

before "real smartphones"???? - Classic WM may not have been as slick as iOS, Android, and WP7, but it did more of the tasks I need out of the box than the newer platforms do. I can get close to the old Classic WM capabilities with free / low cost apps with Android. iOS, and WP7 are too restricted for my mobile needs. But out of the box, nothing came close to WM capabilities at least for my mobile computing needs.

This is NOT extortion, not even close. First of all, they all (agree to) play by the same rules. Fair-square. Secondly, patents are critically important because it takes effort and intelligence to come up with new ideas, and without patents everyone could copy those ideas for free and not have to bear the cost. At that point, why bother investing first in innovation? Better to wait and let everyone else do the heavy lifting, then copy it for free.

Microsoft came up with those ideas first, researched them, innovated further, and documented them into a patent. Samsung read the patent, used the fruits of the effort, and now they need to pay for it. If they disagreed, they wouldn't consider paying.

It's intelligent business and it leads to new technology faster than any other method. Without patents, we'd still be using mail to communicate -- it would be too much cost and too little return to innovate.

There is NOTHING Fair or Square about IP business law! This is as backhanded as it gets (short of corporate takeovers). IP is about innovation and the ability to profit from that innovation. Acquiring companies strictly for their IP portfolio, is NOT innovation, it is business for profit and in many cases now, protection. This is not what the system was originally designed to do. The U.S. patent system needs a complete overhaul and it needs to get back to what it was originally intended to do, protect the rights of the inventor.

That implies that SOMETHING is actually INVENTED, not just an IDEA of something that might or might ever actually exist or be created. Ideas should not be patentable, only actual tangible and demonstratively WORKING products (software and/or hardware)should reach the patent offices. Variations of an IDEA should not be enforceable in a court, only where an actual product is a replica of the key components of a given product should be enforceable. The current system stifles innovation as the current costs of ground up R&D are staggering due to the big players capitalizing the resources and talent necessary to allow smaller companies to push forward advancements to current or existing technologies.

This is one area where Open Source innovation thrives. The problem comes when there is money to be made. Then the Microsharks begin immediately circling. The greed is so prevalent that they are willing to stifle or even kill human technological advancements, to suck 100% of the profits out of it, like some technology vampire, let loose in a global metropolitan area.

Oh, and exactly which patents does Android actually violate, of Microsoft's IP portfolio? And if it were really about protecting technology, then why demand any royalties at all, just use the tech. for your own profitability. That is legal too! No, this is all about greed and gaming the system for profit.

Agreed.

Somebody was sitting around and thought "What if blankets had sleeves?" and the Snuggie was born. However, people still make knock-off Snuggies. When I see them, I wonder about the patent. Either they didn't get a patent, couldn't patent it, or the patent was too narrow. This type of situation is repeated for many products from perfume (By the way, you can't patent a scent. Software should be the same way.), sunglasses, toys etc. I think the inventor of the Snuggie deserves more IP protection than someone who patents "A method to access applications by arranging icons in a rectangular pattern" or other such nonsense that gets patent protection these days.

No matter whose phone you buy, just about everyone with a patent relating to its design will get a slice of the pie. All they are discussing is the size of the slice, and that involves the valuation of patents from both companies and the payment is for the difference between the two. Plus, it is offset by the strategic value of any business arrangements involved.

Jeez ... that sounds just like when I used to do that stuff !!

Microsoft has patents relating to cellular technology and code that Android may be violating. Microsoft is basically telling Samsung, give us money and we won't sue you over those patents like they're suing Motorola. HTC is already paying this fee so its likely Android does violate those patents.

"so its likely Android does violate those patents," not necessarily. That would be for a court to decide, IF microsoft ever decided to go after Google for this alleged infringement. Instead, M$ is going after the money and the mobile computing market share. Microsoft /= Ethical Company

They see Android product makers and Apple as potentially serious business threat, (As mobile computing is the future of computing) and they know that they are late to the game with competitive products. This is only the beginning, which is why all of the big players will be bolstering their IP portfolios through acquisition or in apple's case, filing patent requests at an alarming rate.

I wonder what's the licensing fee that Samsung pays to Microsoft for every Windows phone 7 phone they sell? I would be willing to bet it's probably the same $15. To me that's excessive since with Windows Phone Samsung gets an entire OS and support for it while the Android fee they're basically paying not to get sued.

It all boils down to one logical conclusion.... And that is simply this > > > >

Everyone is out to make a buck.

We can sit here all day arguing about "coding" or "hardware patents" etc etc.... But do any of you HONESTLY believe that MS is truly "worried" about Samsung, HTC, or any other capital phone maker using "code"? I don't think so. Stuff like this has been happening since the birth of so called "Smart Phones". It's all about Makin a buck or 2. It really is that simple.

Samsung should just threaten to stop producing Windows Phone 7 devices. I believe they are the largest WP7 manufacturer and the only one offering AMOLED screens thus far, which really make WP7 shine with its mostly black UI. Even with Nokia on board now, it would be a major blow to Microsoft. Samsung's Android phones are selling far better anyways so it would make sense to streamline and focus on one platform.

That would be potentially problematic for Samsung. They have already damaged their multi-billion dollar relationship with apple. getting Microsoft on their bad side too, might not be too lucrative for Samsung's computer divisions! Profits from Android alone would need to secure a long term profitable future for Samsung.

Besides, if WP7 does what some analysts predict, WP7 will be the #2 platform globally, within 4 years. That is just too much money to leave to just a Nokia or an HTC. Especially with Oracle and M$ screaming patent infringement, from every available rooftop, regarding all things Android.

Google should start demanding licensing fees for every Windows Phone 7 device to protect their own patents. MSs fees on their own OS combined with fees from Google would make Windows phone 7 too expensive to use at all!

Google needs more patents under it's belt to go toe to toe with a company like Microsoft. This is why the Nortel patent portfolio thing was so important to Microsoft and apple to keep out of the hands of Google and Intel. Armed with some patents, Google could then go after Microsoft and Oracle (to some extent) and get them to back away from all things Android. Alas, Google did not win that bid. And we are now facing crazy things like apple with a recently awarded touchscreen patent! If Google does not make some tactical acquisitions soon, I fear that Android, as a Mobile OS platform, may be in trouble or may cost as much or more than WP7 to anyone making mobile computing products with it. I truly hope that does not happen.

Ahhh, Microsoft is becoming the patent troll company it kept propping up all those years ago... SCO Group anyone?

Also, for all you defending this extortion by expressing your undying love for capitalism... In any sort of truly capitalist, laissez-faire market, companies would compete to provide the best goods and services to consumers, by themselves. Not abuse government institutions when they fail to do that. In fact, what Microsoft is doing is a much more, not even socialist but downright communist move... "Government, we can't compete with these other big bad companies, give us some of their money to make it fair!"

I general I agree. However, I will say that IF (big IF) another company big or small, Copies (exactly) a specific key technology from company A and uses it to market their own products(for profit), without the permission of company A, that qualifies as theft and should be afforded some protection under the law. Some "protection" is relative to the determination of TRUE punitive damages, if any. A court should not only determine if a patent has actually been violated, but should also determine what, if any real corporate or business damage has been done as a result. Potential sales of a product by company a that were "lost," should not be a factor, IMO, as there are many, many factors to consider there. But I do not right the laws, so they are simply interpreted as they are today. Many of these disputes never really go to trial as the big companies, have the reserves for protracted legal expenditures as opposed to smaller companies, barely operating on razor thin margins. This is NOT Fair as it stifles business competition, which is generally a good thing for consumers.

Personally, I am not against capitalism, in its purest form, as long as the end result of that capitalistic behavior is ultimately good for the economy and consumerism as a whole. When it is abused for corporate greed and left unchecked, it tends to leads to monopolistic business behavior, ultimately reducing innovation and consumer choice, which is one reason why the U.S. has organizations such as the FTC and is one reason why I believe that the ITC was created.

Yeah, Google really is behind in the patent game. I hope they do something big soon like buy RIM. There are some very compelling reasons for them to do that even if they sold off or closed down the hardware manufacturing portion of the business.

Samsung projects to sell 10 million Galaxy S II handsets by years end. If they succeed, no reason to believe they won't, at the $15 per unit MS wants they would net $150 million from those sales.

This has gotten out of hand, the system is just a joke and not even a good one. The rich trying to get richer every way they can and by doing as little as possible to actually push innovation.

Most of these patents are over a decade old and are just ideas, no actual substance. They just wait for someone else to actually create something and if it succeeds, they sue.

If this BS leads to the end of Android, not that it is the be all end all, but it's demise would lessen the chances of anything worth while ever coming along because of these patent trolls, I will never buy anything made by any of these companies and encourage others to do the same. Even though most people just don't care and will buy anything shiny. :-/

Some say its extortion and others say it's good business practice.

Simply put it's a calculated attach on the fastest growing competitor who's business model shifted costs from the end user to other business who want to advertise.
A Platform without a licence fee for manufacturers to use but now it will cost them more per unit than the cost to licence Window Phone Series 7.

It will slow the growth of Android and maybe force some hardware manufacturers to stop their Android projects completely as making Windows phones wouldn't incur a $15 Dollar per unit slap on the wrist.

That's the way of the world, why compete with this rush of tech features when you can swipe the legs from underneath the competition without lifting a finger.