HTC Android deal could pay off for Microsoft, not Google

Microsoft might soon extract a royalty on every HTC Android smartphone.

Microsoft may be on its way to earning a percentage of every Android handset sold, something even Google hasn't accomplished.

Here's how it works: For licensing its intellectual property to Nexus One maker HTC, Microsoft will receive an unspecified royalty, presumably on each Android handset that HTC sells. HTC may also receive help in its legal battle with Apple, although that remains to be seen.

Microsoft claims Android violates its intellectual property, although it has yet to specify the patents involved. Redmond has previously made similar noises about Linux, a close relative of Android. The difference this time is that Microsoft appears to be following up on its claims.

Apple makes the same claim and has already sued HTC and Nokia over iPhone patents, claiming the makers' smartphones violate its intellectual property. Nokia, for its part, has countersued Apple.

It's worth noting that neither Apple nor Microsoft appear to be threatening Google directly. And for each company, the motivation to challenge Android indirectly is different.

Apple, presumably, would prefer for Android to simply vanish. It has nothing to gain by not suing, if only to give smartphone manufacturers second thoughts about the Google OS.

Meanwhile, the Microsoft agreement, and HTC's tacit admission that Android handsets need a Microsoft intellectual property license, is a warning to other Android manufacturers that they too need to ante up to Redmond.

Or is it?

First, none of the details are public. We don't know the specific patents HTC has licensed or how much it is paying Microsoft. Given that Microsoft and HTC are BFFs, based on the Taiwan company's longtime support for Microsoft smartphones, it is possible the deal is actually cash neutral and no money changes hands.

If I were in the Android handset business, I'd start looking over my shoulder and making a deal with Redmond. Not that Microsoft is likely to sue, but you never know. With Apple already suing HTC over Android, all a company needs is having to deal with Apple's and Microsoft's lawyers at the same time. Would Android really be worth it?

Still, as long as it keeps trying to popularize its Windows Phone OS, Microsoft would not want to anger anyone who might possibly build a Windows smartphone.

And that could be the point: Suppose a smartphone manufacturer's Windows Phone OS licenses also included patent protection for its Android phones, too?

Such an arrangement might be used to "convince" (as "coerce" is such an ugly word) Android manufacturers to add Windows phones to their product lines. It could also allow Microsoft to, yes, record a bit of revenue for every Android smartphone sold--provided manufacturers license its IP.

Here's another angle: Without knowing the specific intellectual property involved, it's possible that having a Microsoft license could allow a manufacturer to claim immunity from Apple's claims. This could add a layer of complexity to Apple's challenge to HTC and, potentially, other companies, as well.

Or maybe Android smartphone manufacturers will just look at the Microsoft/HTC agreement and yawn.

I am not saying any of this is happening or will happen, but if I were Microsoft I'd use patent protection as a way to reward my friends.

And, if necessary, punish my enemies.

As for Google, once Apple and Microsoft are done extracting royalties, building an Android phone might someday be as expensive as licensing a smartphone OS from Microsoft or Apple. With Google earning not a dime in the deal.

David Coursey has been writing about technology products and companies for more than 25 years. He tweets as @techinciter and posts to Facebook. He is best contacted via his Web site.

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David Coursey

PC World (US online)
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