Adding to that estimated $444 million Goldman Sachs predicts Microsoft will earn off license agreements with Android vendors, the company has just entered an agreement with Compal Electronics, Taiwan-based makers of tablets, phones, and e-readers running Android and Chrome. Compal currently has revenues of approximately $28 billion per year.
As part of the Compal announcement, Microsoft also wants you to know that more than half of all Android devices are now covered by their “cross-license agreement”. In other words, manufacturers accounting for half of all Android devices produced now pay Microsoft a patent related royalty.
This follows Microsoft signing up smartphone industry heavyweights Samsung in an agreement similar to those already in place with HTC, Acer, ViewSonic, and others. The graphic below shows the percentage of Original Equipment Manufacturers currently in cross-license agreements with Microsoft due to Android. The company posted a similar graphic showing 55% of Original Design Manufacturers, such as Compal.
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It’s of course important to note that historically all manufacturers pay a royalty to patent holders, and in this case the courts have obviously decided that Android is infringing on Microsoft-owned patents. Microsoft explains the intentions of their licensing program below:
“Amidst continuing clamor about uncertainty and litigation relating to smartphone patents, we’re putting in place a series of agreements that are reasonable and fair to both sides. Our agreements ensure respect and reasonable compensation for Microsoft’s inventions and patent portfolio. Equally important, they enable licensees to make use of our patented innovations on a long-term and stable basis.
At Microsoft we’re building on our extensive experience with patent licensing. Over the past decade we’ve spent roughly $4.5 billion to license in patents from other companies. These have given us the opportunity to build on the innovations of others in a responsible manner that respects their IP rights. Equally important, we’ve stood by our customers and partners with countless agreements that contain the strongest patent indemnification provisions in our industry. These ensure that if our software infringes someone else’s patents, we’ll address the problem rather than leave it to others.”