News

Strange Bedfellows: Microsoft and Samsung in Agreement over Android

Microsoft's agressive strategy leads to cross-licensing agreement.

• By Lee Pender
• 09/29/2011

Microsoft's patent strategy in the mobile-device industry has created a wave of agreements and breakups that is likely keeping vendors' lawyers on their toes (see "Microsoft, Google and the Game of Patents"). The latest Android cross-licensing agreement between Microsoft and Samsung has unleashed a new round of alliances and suspicion that once again ensnares some of the industry's biggest names.

At the heard of this agreement: Samsung will pay Microsoft royalties for using Google's Android operating system in tablets and mobile phones.

"Microsoft and Samsung see the opportunity for dramatic growth in Windows Phone and we're investing to make that a reality," said Andy Lees, president of Microsoft's Windows Phone Division, in a press release. "Microsoft believes in a model where all our partners can grow and profit based on our platform."

Microsoft seems to believe in hanging what it considers to be a strong patent portfolio over the heads of device makers that use Android; the company apparently holds the position that Android violates at least some of the patents in Microsoft's mobile-OS portfolio. A paragraph in a recent Microsoft blog entry lays out the company's mobile-patent situation in simple terms; it notes:

Together with the license agreement signed last year with HTC, today's agreement with Samsung means that the top two Android handset manufacturers in the United States have now acquired licenses to Microsoft's patent portfolio. These two companies together accounted for more than half of all Android phones sold in the U.S. over the past year. That leaves Motorola Mobility, with which Microsoft is currently in litigation, as the only major Android smartphone manufacturer in the U.S. without a license.

Google's purchase of the company for $12.5 billion is still pending. One of the obvious motivations for Google's acquisition was Motorola's patent portfolio, which the search firm apparently hoped to use to fend off disputes from patent holders such as Microsoft.

According to the Korea Times via GigaOM, Samsung, which holds a large patent portfolio of its own, apparently wasn't sure that Google's Motorola buy would do any good in fending off patent problems and signed a deal with Microsoft anyway.

Google issued a statement accusing Microsoft of extortion, which Microsoft brushed away, obliquely suggesting that Google might do well to follow the lead of device makers such as Samsung and HTC that have reached patent agreements with Microsoft.

Extortion or not, Microsoft's mobile patent strategy has brought in revenue at a time when its own mobile OS, Windows Phone 7, continues to struggle for market share. Goldman Sachs says that Microsoft will earn nearly $450 million from Android patent agreements in 2012. How much damage Microsoft's aggressiveness will do to the Android OS -- and what kind of impact it will have on relationships with handset and tablet makers -- remains to be seen.

In its blog post, though, Microsoft speculated that "[t]here undoubtedly will be a good deal of additional drama before this new generation of patent issues sorts itself out in its entirety." Of that, there can be little doubt.