Does Microsoft Own Android?

Want to manufacture and bring a Google (Nasdaq: GOOG  ) Android device into the market? You're going to have to stop by Microsoft's (Nasdaq: MSFT  ) patent toll -- or should I say "troll?" -- booth before you head down the treacherous road to go head-to-head with Apple's (Nasdaq: AAPL  ) iPad and's (Nasdaq: AMZN  ) Kindle Fire.

It's yesterday's news that Microsoft collects royalties from Android devices. Yet what most likely don't realize is how deeply Mr. Softy has its hands in the jar at this point, after the company's efforts have been snowballing and its list of licensees continues to grow, with Compal Electronics as the latest addition. The number of companies that have signed on the dotted line is now up to 10, with a handful additionally still in patent litigation. Here they are in chronological order:

  1. HTC -- April 27, 2010
  2. General Dynamics (NYSE: GD  ) Itronix -- June 27, 2011
  3. Velocity Micro -- June 29, 2011
  4. Onkyo -- June 30, 2011
  5. Wistron -- July 5, 2011
  6. ViewSonic -- Sept. 8, 2011
  7. Acer -- Sept. 8, 2011
  8. Samsung -- Sept. 28, 2011
  9. Quanta Computer -- Oct. 13, 2011
  10. 0.   Compal Electronics -- Oct. 23, 2011

You may not be familiar with some of these manufacturers, while others are household names. These licensing agreements now cover more than half of all Android devices. On top of that, Microsoft is still dueling with Barnes & Noble (NYSE: BKS  ) , Foxconn, Inventec, and Motorola Mobility (NYSE: MMI  ) .

HTC was the first to ink an agreement, but you'll notice that the rest have all caved within the past few months. Although no financial terms are disclosed, Samsung likely caught a break by agreeing to beef up its support of Windows Phone. Quanta is notable since it is the maker of Research In Motion's (Nasdaq: RIMM  ) PlayBook as well as the Kindle Fire.

Goldman Sachs has estimated that the average royalty per device is between $3 and $6, and that the Redmond giant stands to collect roughly $444 million over the next year. Other estimates have been as high as $10 per Samsung and HTC device, so this figure could even end up higher.

Google CEO Larry Page is understandably peeved by the whole situation but feels Microsoft's trolling ways may end up backfiring since the tolls may "alienate" the same OEM partners that it is enslaving while it also needs them to support Windows Phone. In contrast, the Samsung deal shows that the royalty negotiations might just be the perfect leverage to coax manufacturers onto the Mango train.

  • Add Microsoft to your Watchlist to see if it grows its list of Android slaves.

Fool contributor Evan Niu owns shares of Apple and, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple, General Dynamics, Microsoft, and Google. Motley Fool newsletter services have recommended buying shares of Microsoft, Apple, Google, and and creating bull call spread positions in Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 24, 2011, at 11:42 PM, prginww wrote:

    These companies are just living off of the proceeds of criminal behavior. It is time to go after the big dog in this family.

  • Report this Comment On October 25, 2011, at 2:18 PM, prginww wrote:

    The whole patent law system needs to be updated because there are just way too many of these types of actions and lawsuits.

    Will say this one though is not nearly as bad as Apple claiming that they hold the patent on common jestures for touch screens.

  • Report this Comment On October 25, 2011, at 3:45 PM, prginww wrote:

    When a tiny manufacturer settles against a big bad toller, it's patent trolling.

    But when huge numbers of major manufacturers, including HTC and Samsung, all capable of funding massive litigation, all settle with one company, then the chances are the law was on that company's side, and the technology/patents were stolen. Or the behavior of the licensees is at best dangerously close to the line....

    I'm both an MSFT and a GOOG long, and MSFT was probably right on this one.

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