The surprising revenue figures released in a court battle by the Tech giant point that Microsoft in terms of Patents makes almost $1 Billion per annum from Samsung
The patent wars are confusing and often hard for ordinary people to understand. Google the makers of Android operating system – the most used operating system for handheld devices, mobile phones and tablet pc’s – owe a lot to Microsoft. The true extent of the money was not known, speculations about royalty fees were recently silenced when in a recent filing Microsoft revealed the exact amount that was paid to it by Samsung (the Korean company at the forefront of smartphone manufacturing). The sub routines, procedures, software code and other things used in Android contain enough patents from Microsoft that it earns the company a hefty shining $1 billion a year from Samsung.
Microsoft has broken down its business in difficult business units for those who are unaware how the tech giant works. Each independent unit is responsible as a cost and profit center on its own. The diversification of Microsoft has also meant that its divisions are varied in nature and often operate without little or no interaction with each other, often competing against for showing better numbers in terms of results and performance. The amount made from Samsung for patents dwarfs the operational revenue of the Entertainment and Devices Division, (a division that includes the Xbox console including Kinect and Xbox live gaming through internet, the online extremely popular video calling service of Skype and the Windows Phone unit), by a mere matter of $150 million (the division made $848 million in terms of operating revenue in a year).
There are other units in Microsoft, take for example the search engine for Microsoft, Bing and the MSN network which made a loss of $1.3 billion in just one year. Last year apple won a long and exhaustive trial for patents against Samsung, the much publicized trial that divided opinions the world over, made Apple less money than Microsoft makes from Samsung. Things just keep getting better for Microsoft; this figure of payments that the company gets on Android payments is just coming from one company, off course there are other manufacturers in the market creating Android phones.
The patent wars have resulted in questions about ownership of technology. The court cases have been abundant, the wars have been long and results never have been the final words. No one actually knows the exact extent of patents that Microsoft has over android, nor the number of patents that are exactly used. An estimated number of patent families came out to be 200, during the investigation carried out by the Chinese Authorities at the time when the deal to purchase Nokia was underway. The massive number is indicative of the influence held by Microsoft over the Android Operating System.
For Microsoft, the patent wars and Android’s popularity has opened an opportunity that the company has been unable to create through its one phone production. Even the mighty Nokia that has been a high profile acquisition is not supposed to create direct synergy, the usage of Android as the operating system of choice for Nokia phones may probably provide a glimpse into the future direction that the company will take. The impact of this is hard to calculate, if Nokia is able to gather a foothold in the Android smartphone market, the direction of payments is bound to reverse. A success will also mean lesser sales of Samsung’s smart phone decreasing the fixed revenue that is coming into the organization. It also means the royalty payments and contractual fees back to Google for using the Android system, a set of completely related but hard to predict outcomes that can prove really critical in the future.
For the moment, Samsung is a key contributor for Microsoft, it may all change completely in the future and that makes an interesting story to follow