back to article How much is Microsoft earning from its Android taxes again?

We’ve known for years that Microsoft makes more money from Google’s Android than Google does itself – but now we have a better idea of how much hidden “tax” is included in the price of an Android handset. That’s because Samsung and Microsoft have fallen out, and Redmond’s lawsuit sheds light on the secretive world of patent …

  1. Flocke Kroes Silver badge

    According to the patent lobby...

    Hundreds of thousands of free software developers are reading through patent filings, and after they have read some, they are instantly ready to release software.

    In the real world, programmers do not read patent filings because at best it is a complete waste of time, and at worst, triple damages for wilful infringement.

    Why do we have a patent system at all?

    1. Anonymous Coward
      Anonymous Coward

      Re: According to the patent lobby...

      "Why do we have a patent system at all?"

      To protect big companies from competition and to keep patent lawyers in new BMWs.

    2. Graham Marsden

      @Flocke Kroes - Re: According to the patent lobby...

      I would have up-voted you if it hadn't been for that last line.

      Patents, when granted and applied properly serve a useful purpose. Unfortunately, of course, these days the system has been so abused with ridiculously broad patents being granted (not to mention software patents) that the whole system has broken down and needs root-and-branch reforming.

      1. Flocke Kroes Silver badge

        Re: @Graham Marsden

        Have you got evidence of a patent that was granted and applied for properly serving a useful purpose?

        1. Graham Marsden

          @Flocke Kroes - Re: @Graham Marsden

          Are you seriously asking me that? (NB, for clarity, I'm talking about *proper* patents, ie ones for actual inventions, not "methods" or "software" or nonsense like that)

          1. Anonymous Coward
            Anonymous Coward

            Re: @Flocke Kroes - @Graham Marsden

            Even in those circumstances it's difficult to see why they should be protected for more than 5 years. Looking back at many inventions it is often the case that several people were looking at the same thing around that time so it seems unreasonable to give a huge advantage to the one who happened to get there first.

        2. Anonymous Coward
          Anonymous Coward

          Re: @Graham Marsden

          Westinghouse's "Air Brake" perhaps?

    3. JeffyPoooh
      Pint

      Re: I do wonder

      @AndyS asked: "@TheVogon: Why are you replying to a comment below yours?"

      Because there's a discontinuity in the Space-Time Continuum.

      1. Michael Wojcik Silver badge

        Re: I do wonder

        Because there's a discontinuity in the Space-Time Continuum.

        Maybe Eddie can do something about it while he's there?

    4. Charles Manning

      Re: According to the patent lobby...

      I wrote some of the software that MS claimed was infringing. It was not, and MS finally backed down after a fight.

      By my calculations, MS would have made somewhere between $50M and $100M out of my efforts.

      When one of the phone vendors wanted me to investigate something, they offered no payment. I was feeling a bit grumpy that day and suggested they'd paid MS for the use of the software so perhaps they should ask MS for tech support too.

      You can't get too twisted up about this because you'd just end up a bag of ulcers.

      According to one of the lawyers I dealt with, MS has a huge patent portfolio that is well orgaised and indexed. They have people going through the patents and trying to see how these might be applied. Anything that looks like it might be close to infringing is thrown on the pile. This is a huge revenue stream for MS, so it pays to spend a few million per year organising it into a profitable money spinner.

  2. Anonymous Coward
    Anonymous Coward

    I do wonder

    How much would Samsung be paying Microsoft if Samsung was the US company, and Microsoft was Korean?

    A lot of these cases seem to have at least an element of protectionism.

    1. TheVogon

      Re: I do wonder

      "How much would Samsung be paying Microsoft if Samsung was the US company, and Microsoft was Korean?"

      The reason that Samsung pay Microsoft is that Microsoft spend a far higher percentage of revenue on R&D - and Microsoft accordingly have a much stronger patent portfolio.

      Hence why Apple (a US company) have to pay Nokia (a non US company) similar patent fees....

      "If you make an Android phone you have to pay Microsoft $3.29. If you make a Windows phone you have to pay Microsoft nothing at all."

      And you also likely have to pay Nokia and Apple. But in this case Microsoft make more money overall - both from Bing search advert revenue - and from the Windows Store.

      1. Anonymous Coward
        Anonymous Coward

        Re: I do wonder

        I was thinking of the Apple/Samsung lawsuit that rolled on at length in the US while a UK judge dismissed it in hardly any time at all.

      2. AndyS

        Re: I do wonder

        @TheVogon: Why are you replying to a comment below yours?

      3. Gordon 10 Silver badge
        FAIL

        Re: I do wonder

        Im not sure comparing R&D spend between M&S and Samsung is useful in this case.

        1. The lag between R&D spending and Patent granting is HUGE - it probably takes 10 years to realise the R&D spend in a granted payment.

        2. Most of that $3.29 payment probably comes from 5, 10 or 20 year old Windows and Dos patents, and is no guide to what M$ is doing now.

        3. Samsung and M$ have vastly different commercial interests outside of the mobile and computing sectors - we don't know how their internal sectors breakdown that overall R&D budget. Its entirely possible that MS's Nokia division has a fraction of the R&D budget that Samsungs phone division has or vice versa.

        1. h4rm0ny

          Re: I do wonder

          >>"1. The lag between R&D spending and Patent granting is HUGE - it probably takes 10 years to realise the R&D spend in a granted payment."

          Microsoft is rather more than ten years old. Founded in 1975 as it happens. And they've historically put a lot of resource into R&D. Not to mention they have a history of buying up competitors along with any IP that goes with that. I can't comment on Samsung's R&D budget as I don't know much about it, but the above counter-argument is wrong.

          >>"2. Most of that $3.29 payment probably comes from 5, 10 or 20 year old Windows and Dos patents, and is no guide to what M$ is doing now."

          Speculation. All we can reasonably say is that FAT is probably one of the patents. But we don't know about the rest of them.

      4. Indolent Wretch

        Re: I do wonder

        "The reason that Samsung pay Microsoft is that Microsoft spend a far higher percentage of revenue on R&D"

        In this case the patent is for a hopeless kludge, desperately applied to try and keep relevant an appalling piece of software that was barely fit for purpose when it was first released. R&D spend has absolutely nothing to do with it.

        The idea that anybody should have to pay anything for the damn thing is an insult to everything that software development is about.

        1. TheVogon

          Re: I do wonder

          "In this case the patent is for a hopeless kludge, desperately applied to try and keep relevant an appalling piece of software that was barely fit for purpose when it was first released."

          I don't think much of Android either.

      5. Anonymous Coward
        Anonymous Coward

        Re: I do wonder

        The reason that Samsung pay Microsoft is that Microsoft spend a far higher percentage of revenue on R&D

        No. The value of a patent doesn't matter how much you spend on R&D (actual R&D, not buying patents) - it's how critical the patent is.

        For example, if you spent 10 years on a 5% faster mouse trap and try charging me your salary x10 - I'd tell you to piss off, and I'll continue with my slightly slower method.

        If, however, you spend a Friday afternoon day dreaming and came up with something irreplaceable that need in my product, I'd "have" to give you what you want (but ask too much, I'll fold).

        1. Anonymous Coward
          Anonymous Coward

          Re: I do wonder

          Not to defend Microsoft, but they have been in the smartphone game quite a bit longer than Samsung. The Windows Mobile product line didn't exactly set the future direction of the smartphone market, but surely there are a few patents there relevant to Android?

          That's also why Apple is paying royalties to Nokia. It has little to do with R&D spend, more to do with the fact that Nokia has been making phones since before Jobs' return, while Apple sold their first in 2007. One would think Nokia had a lot of patents relevant to basic cell phone functionality, let alone smartphones, because they had built hundreds of models before Apple had built its first.

          Even if Apple had some patents covering the modern smartphone (differentiating from the pre-multitouch smartphones Nokia sold in the early 2000s) they could assert against Nokia, net/net Apple would be expected to end up paying as Nokia would have way more relevant patents.

      6. Daniel B.
        Boffin

        Re: I do wonder

        The reason that Samsung pay Microsoft is that Microsoft spend a far higher percentage of revenue on R&D - and Microsoft accordingly have a much stronger patent portfolio.

        Nope, the reason Samsung pays Microsoft is because Microsoft has been pulling a SCO on the main Linux players and claiming that Linux uses MS patented stuff, but fail to produce the "offending" code. They just FUD their way into extortion, and up until now, both the Linux and the Android players have just ponied up the cash. Samsung has probably reached a point where it can actually bring up the fight against Microsoft. It would be interesting to see those patents either invalidated or proven not to be infringed at all, SCO-style. You'd think the IT industry would learn its lesson from the SCO fallout, but it doesn't seem to be the case.

        1. h4rm0ny

          Re: I do wonder

          >>"Samsung has probably reached a point where it can actually bring up the fight against Microsoft. It would be interesting to see those patents either invalidated or proven not to be infringed at all"

          This case has nothing to do with the validity of the patents. Samsung are trying to exploit what they see as a loophole resulting from the Microsoft acquisition of Nokia's devices and services division. It's almost entirely irrelevant to what the patents actually are.

  3. Ralph B

    Strange World

    If you make an Android phone you have to pay Microsoft $3.29. If you make a Windows phone you have to pay Microsoft nothing at all.

    1. Anonymous Bullard

      Re: Strange World

      So it makes you wonder how Microsoft are getting a return for their investment on Windows phones/slabs.

      Actually, we already know the answer, that's why they're so hell bent on the walled garden approach and slurping as much info on us as they can. I remember the good old days when you could just buy an OS (licence) and be done with it. People complained about the price, but with a £0 OS there's a much bigger price.

    2. kmac499

      Re: Strange World

      If you make an Android phone you may well sell a few ..

      If you make a Windows phone ....?

    3. Doctor Syntax Silver badge

      Re: Strange World

      i wonder what the EU competition commissioner might make of this.

  4. Anonymous Coward
    Anonymous Coward

    And that is why mobile Windows is so shite - they want you to use Android.

    1. Anonymous Coward
      Anonymous Coward

      RE: And that is why mobile Windows is so shite - they want you to use Android

      Having owned iPhone 5S, HTC One, Moto G (2nd edition) and Lumia 800, 720, and 925, I have to say that although Android is very usable and has far more apps (often of better quality even when WP8 has that app), I still feel nothing but pity for those Android users who have never tried living WP.

      It's all a matter of taste/preference but, for me, nothing in Android is superior enough to WP to make me want to use that hodgepodge of kludge in preference to the consistent delight that is WP and, to some extent, iOS.

      YMMV.

      1. Anonymous Coward
        Anonymous Coward

        Re: RE: And that is why mobile Windows is so shite - they want you to use Android

        The number of people with a WP in this forum seems to be much greater than in out in the wild. I wonder why that is?

        1. hoverboy

          Re: RE: And that is why mobile Windows is so shite - they want you to use Android

          Because this forum is Worldwide and not just the USA? I know it's an unrepresentative sample but I work in a German aerospace company where people will laugh at you for not having a WP; (stupid) foreigners use Android, (fashion-conscious) 'Marketing' use iPhones, all the engineers use WP...

          1. Zane

            Re: RE: And that is why mobile Windows is so shite - they want you to use Android

            Ok - and so why is it that your colleagues laugh about people using phones that actually do what you want and where you can install apps you really need?

            Yes I also know some people you have a WP - most hate it. The ones who like surprisingly have never had an Android or an iPhone.

            /Zane

        2. Yet Another Anonymous coward Silver badge

          Re: RE: And that is why mobile Windows is so shite - they want you to use Android

          A number of people in this forum work in corporate IT for shops that are heavily microsoft dominated. So its useful to have the tools to connect to them natively.

      2. Anonymous Coward
        Anonymous Coward

        Re: RE: And that is why mobile Windows is so shite - they want you to use Android

        "... to make me want to use that hodgepodge of kludge in preference to the consistent delight that is ..."

        And here I thought it was just me that had concluded that Android sucks donkey balls!

        I was drooling at the Sony X3 the other day, too big for me, but the compact version seems like a boss piece of hardware - sadly, it carries the encumbrance of Android :(

        You see what I did there? I praised sony, denigrated Android and quoted a commentard who was positive towards WP and iOS. Crikey, I just need to add that Linux on the desktop is a lost cause and too hoplessly fragmented to ever be a player and I will have ticked every "anti" box.

        This must be deserving of a new record in the number of downvotes, not?

  5. cambsukguy

    As a percentage of profit

    A razor-thin profit after marketing costs etc., three bucks plus is quite a lot, apparently a Billion dollars a year for one company alone.

    A million here and a million there and pretty soon you are talking real money - to paraphrase Tom Clancy.

    1. P. Lee Silver badge

      Re: As a percentage of profit

      > three bucks plus is quite a lot,

      Indeed. Perhaps not on the S5, but on the far more numerous low-end phones, though it might be calculated as a percentage.

      Far more interesting would be to know if it covers any real tech or if its just quid pro quo for Samsung getting a good deal in other areas - oem windows licensing perhaps.

  6. Anonymous Coward
    Anonymous Coward

    Microsoft scrapping WP royalties

    "Even Microsoft admitted that manufacturers need costs to be as low as possible, when it scrapped royalties for Windows Phone"

    It may have admitted that, but scrapping WP royalties was/is really a desperate move trying to not lose what little share WP already has after they realized that Nokia alone is not going to be enough to realize their "cloudbile" strategy.

    These tactics have not worked well in the past. Remember when they extended XP sales and support windows? That was due to pressure from enterprise customers, but also because they were panicked over Netbooks being sold with some Linux variant installed. That was useless, as Notebooks were a passing fad, Chromebooks are cornering the lower end of the laptop market and lots of enterprises are still laboring on how/when to move off XP.

    1. Anonymous Dutch Coward
      Coffee/keyboard

      Re: Microsoft scrapping WP royalties

      "Cloudbile" - great term for their "strategy": feeling nauseous already ;)

      1. Michael Wojcik Silver badge

        Re: Microsoft scrapping WP royalties

        "Cloudbile" - great term for their "strategy": feeling nauseous already ;)

        It's a bit of a mouthful. "Clobile" would be more along the lines of the usual Reg portmanteaux.

        Indeed, I find it simultaneously euphonious and obnoxious, and I urge the Reg editors to adopt it immediately.

    2. Anonymous Coward
      Anonymous Coward

      Re: Microsoft scrapping WP royalties

      "Chromebooks are cornering the lower end of the laptop market "

      Not really - with the latest Intel Chipsets you can get a low end Windows laptop for about the same cost as a Chromebook. Chromebook might do a job, but it's vastly inferior to a proper PC.

      1. Anonymous Coward
        Anonymous Coward

        Re: Microsoft scrapping WP royalties

        Chromebooks might be inferior to a "proper PC", but Windows net-books are inferior to Chromebooks. Try either, you'll see.

      2. Anonymous Coward
        Anonymous Coward

        Re: Microsoft scrapping WP royalties

        "with the latest Intel Chipsets you can get a low end Windows laptop for about the same cost as a Chromebook"

        Even if that is factually true, the target demographic for people wanting a low end computer to do basic tasks does no longer need Windows with all its complexities. These people end up buying a Chromebook if only because it is simpler.

      3. Anonymous Coward
        Anonymous Coward

        Re: Microsoft scrapping WP royalties

        Honestly, I have never seen even 1 chromebook in the wild. It must be because I live in the affluent part of the world where everyone who has a job can (and does) have an iPhone, and notebooks have long since been relegated to a permanent desk position and replaced by tablets.

        Honestly, I have not seen even 1 in the wild. Can someone show me what part of the world these massive chromebook sales are happening in?

      4. Anonymous Coward
        Anonymous Coward

        RE: Chromebooks are cornering the lower end of the laptop market

        Turns out from more recent figures that the entire Chromebook market actually composes around 1% of laptop/notebook sales.

        Of course the big figures trumpeted a few months ago that got Chromebooks on the radar (was it NPD data? I cannot remember) were clarified to be representative of education sales only not the whole market, but the deception had already taken hold.

        Not to denigrate Chromebooks (I'm on my second), but I do so like a little more accuracy in numbers.

    3. Jess

      Re: as Notebooks were a passing fad

      (Presuming that is a typo for netbooks)

      I don't agree. I think the maket was for simple devices that access the net without the bother of Windows .Microsoft prevented the netbook fullfilling this, so the market was ripe for the tablet.

      1. Anonymous Coward
        Anonymous Coward

        Re: as Notebooks were a passing fad

        "(Presuming that is a typo for netbooks)"

        Indeed it was. Thanks for the correction, I saw it too late, however.

      2. P. Lee Silver badge

        Re: as Notebooks were a passing fad

        > think the maket was for simple devices that access the net without the bother of Windows

        Perhaps, but I suspect the cost is in the marketing, screen and battery. None of these things reduce when you take Windows out of the equation. RAM and CPU are relatively cheap.

    4. MacroRodent Silver badge

      Re: Microsoft scrapping WP royalties

      Chromebooks are cornering the lower end of the laptop market

      Tablets, actually, and big smartphones. I don't think I have seen anyone use a Chromebook, but my morning commute in the Helsinki local train is full of people staring at tablets and smartphones, with a sprinkling of laptops. They now clearly outnumber people reading newspapers, magazines, or books.

      No wonder the paper industry is in difficulties.

    5. Anonymous Coward
      Anonymous Coward

      Re: Microsoft scrapping WP royalties

      Had Microsoft had zero royalties for WP7 from day one, back when Android was a fuddled mess in the 1.x and 2.x days, they probably would have had a much better market share. Maybe not as high as Android, but they'd likely exceed Apple's share and be a true competitor instead of an also-ran.

      1. Daniel B.

        Re: Microsoft scrapping WP royalties

        Had Microsoft had zero royalties for WP7 from day one, back when Android was a fuddled mess in the 1.x and 2.x days, they probably would have had a much better market share.

        I doubt it. Windows Mobile had a rock bottom share since forever, and anything associated to Windows Mobile would usually see their market shrink & die in a matter of months, or years if they were really lucky. See Palm, Sendo, even HTC. It isn't really a wonder that WP7 also dragged Nokia from #1 OS (Symbian) to "right next to the Other category". It also didn't help that when MS dumped WinMo 6.5 for the full rewrite WP7, they had already done the "dump & rewrite" trick a couple of times already. Remember Windows CE? A lot of stuff was deprecated/obsoleted when they dumped that in favor of Windows Mobile. Some devs commented that they were feeling deja vu on the whole issue; the thing is that by WP7's announcement, it was far more profitable to develop for iOS or Android than the dying WP/WinMo ecosystem. Hell, even BlackBerry looked more promising than WP!

        1. Anonymous Coward
          Anonymous Coward

          Re: Microsoft scrapping WP royalties

          I will NEVER work with any type of Microsoft/Windows mobile again. The platform is far too volatile and unstable (in terms of API/support) to commit to working on anything beyond a proof of concept. They constantly re-writing, starting from scratch, or "re-imagining", you can't even commit to learning about it.

          You just know they're going to change it again, too - because this current iteration is also failing spectacularly (apart from the same fanatic wackos buying into it again).

          (Actually, that could apply to most Microsoft platforms - but mobile especially)

  7. James 51

    How long will these 'patents' be valid for?

    1. tirk
      Unhappy

      How long will these 'patents' be valid for?

      As long as the megacorps keep paying the governments to extend the law. At least that's how copyright works.

    2. Anonymous Coward
      Anonymous Coward

      And more importantly, is it really anything more than FAT/FAT32?

      Sure there is a load of patients, but how many were thrown in to make it seem more palatable in the horse trading?

      1. h4rm0ny

        >>"Sure there is a load of patients, but how many were thrown in to make it seem more palatable in the horse trading?"

        Throwing in weak patents would be counter-productive. You'd just delay payments whilst targeted companies got them thrown out and generally undermine your own case on the strong ones by association. You don't intimidate companies that are substantially larger than you (such as Samsung is to Microsoft) by throwing in a few extra items in the list that the larger company will immediately recognize as an exploitable point for tangling you up in court.

      2. c:\boot.ini

        > And more importantly, is it really anything more than FAT/FAT32?

        FAT patents have expired; that is why they are coming along with exFAT, these days.

    3. Anonymous Coward
      Anonymous Coward

      More to the point, what exactly are these patents? Microsoft are very reluctant to tell for some reason. Maybe they are afraid that they would be laughed out of court if they did disclose what they were because there is fare too much prior art.

      1. Indolent Wretch

        I was under the impression that the key one is the part of FAT/FAT32 that allowed files with long filenames and how those filenames can then be uniquely represented in a system that doesn't support them.

        Basically a hideous hack job that resulted in all that "THISIS~1.TXT" in the distant past.

        Interestingly this is the patent that was ruled invalid by the German courts at the end of 2013. I believe a document was found written by Linus Torvalds that predated the patent by 3 years. All the points in Microsofts patent that distinguished it from the Torvalds paper were found to not satisfy the technical requirements.

        I assume it's still chugging along through a myriad of appeals.

        1. Adrian 4 Silver badge

          Some tablets & phones - those without removable media - don't even need FAT32 names.

      2. WylieCoyoteUK
        Devil

        The patents can't be that solid and defensible. Note that when challenged on the Nook (which runs Android), Barnes and Noble came up with 20 pages of prior art, which led to them getting a nice deal from MS to shut them up.

        1. h4rm0ny

          >>"The patents can't be that solid and defensible. Note that when challenged on the Nook (which runs Android), Barnes and Noble came up with 20 pages of prior art, which led to them getting a nice deal from MS to shut them up."

          This "nice deal" involved Barnes and Noble selling a very sizeable chunk (about a fifth) of their ebook / Nook business to Microsoft who was very keen to get an In to the sector at the time. It's also odd that you think a company B&N could easily come up with ways to shoot down the patents and get MS to back off but a company thirty times their size in total assets and over a hundred times the annual NET income of B&N (Samsung) would just roll over and comply. You haven't thought this through at all.

          We don't even know that all of the same patents were involved! And the costs between the two companies are not at all comparable. "Twenty pages" that were never tested in court? A lawyer I saw produced more than that for a minor action I was involved with. It's meaningless without specifics. That could have been twenty pages of worthless drawings for all that we know. All that we do know is that B&N sold a large slice of a valuable and growing business to MS in response to the licence request.

          1. hoverboy

            Why the downvotes for this comment? B&N rolled over to let MS tickle them on the tummy and it was widely and accurately reported both by el Reg and others.

            1. RealFred

              Because it didn't fit in with the hivethink on ElReg. You created a disturbance in the force by pointing this out

      3. Anonymous Coward
        Anonymous Coward

        Maybe they are afraid that they would be laughed out of court

        Or even a work-around be made.

        Their secrecy shows how brittle it is.

      4. h4rm0ny
        Facepalm

        >>"Maybe they are afraid that they would be laughed out of court if they did disclose what they were because there is fare too much prior art."

        Yes, because if the patents were weak or easily invalidated, Samsung which is much larger than Microsoft and legendary for its litigiousness and cavalier attitude to other people's IP would certainly not have challenged them.

      5. largefile

        Here's the list of patents:

        http://images.mofcom.gov.cn/pep/201404/20140408143159274.docx

  8. Anonymous Coward
    Anonymous Coward

    Assumption?

    Do we know for certain that the "royalties" are a fixed sum per handset, rather than a proportion of the selling price, or a fixed annual payment independent of whether any handsets are made at all, or a total payment comprising components calculated in several of those ways?

    Presumably the current legal posturing has some connection with negotiating what happens after the current 7-year contract expires ...

  9. msknight

    Separation of handset and OS

    I wonder how long it will be before we see a separation between handset and operating system?

    I mean, I can buy the bits and build the computer, and then load whatever OS I want to buy and load.

    Why the heck can't I buy a mobile phone and then buy an OS to go on it?

    Does anyone, "in the know," know whether we're working towards that eventual day?

    I've just resurrected an S2 and loaded Cyanogen on it. Why can't I buy an S2 without an OS tax? ... that sort of thing. ... or am I being dumb? ... no ... don't answer that last!

    1. A Non e-mouse Silver badge

      Re: Separation of handset and OS

      I wonder how long it will be before we see a separation between handset and operating system?...Why the heck can't I buy a mobile phone and then buy an OS to go on it?

      It'll be a niche thing. For 99.9% of mobile phone buyers, they just want to take their shiny toy out of the box and use it straight away. Just like most people want to take their computer/laptop out of the box and use it straight away, without having to insert floppy discs/CDs/Whatever to install the O/S. And as the O/S is practically free (Especially in the case of Windows Phone) you'd save very little money.

      Apple, Microsoft, Google, etc, know the money isn't in the phone. It's the stuff you buy to go with your phone i.e. App Store. (or the information they can slurp off remotely about you to send you targeted adverts)

      am I being dumb?

      No, you're not. You're just not in the mainstream of people who buy mobiles.

      1. Eddy Ito

        Re: Separation of handset and OS

        There's also a hangup in the architecture. Until there is a standard initialization process on mobile phones it will be complicated to customize the OS to boot on any given hardware. It seems to be getting there but it's painfully slow. In a way PCs were easier because once the bios was reverse engineered and cloned it became fairly trivial to make compatible hardware. In the mobile phone space there aren't many who are in a hurry to reach commodity status.

      2. Anonymous Coward
        Anonymous Coward

        Re: Separation of handset and OS

        slight correction regarding your statement "Apple, Microsoft, Google, etc, know the money isn't in the phone...."

        For Apple, their money IS in the phone.

        The App Store & itunes are what attracts people to buy into their hardware. Don't get me wrong, selling apps, music & videos is profitable income, but compared to the profit from hardware it's insignificant.

        1. hoverboy

          Re: Separation of handset and OS

          Is this really still true? Do you have figures? I'm not saying you're wrong, just interested.

      3. P. Lee Silver badge

        Re: Separation of handset and OS

        >No, you're not. You're just not in the mainstream of people who buy mobiles.

        I suspect marketing funds at play here. Otherwise we'd see phones with SD cards with the OS on them. Phones are too generic and marketing needs differences. It's hard to make up hair-commercial lies for phones.

      4. Anonymous Coward
        Anonymous Coward

        Re: Separation of handset and OS

        "Apple, Microsoft, Google, etc, know the money isn't in the phone."

        At least in Apple's case, it is pretty clear that the money IS in the hardware. It may be other places too, but Apple is a hardware company that make money selling hardware - make no mistake.

    2. corcoran

      Re: Separation of handset and OS

      Issue 1 - 99p

      Further Issues 8.99

      You need 134 issues to complete the phone.

    3. h4rm0ny

      Re: Separation of handset and OS

      >>"I wonder how long it will be before we see a separation between handset and operating system?"

      It's already happened. I had a Nokia phone some years ago that I pulled the existing OS off and put Maemo on there. It still works. Unfortunately never achieved mass-market. It could have been Android before Android was. And it wouldn't have been tied to a particular corporation.

      1. monkeyfish

        Re: Separation of handset and OS

        And that's the reason why open source/linux never gets anywhere despite being 'better' than the competition. There is no single corporation involved with the marketing (and lobbying) budget big enough to force it down peoples throats advertise it.

  10. Anonymous Coward
    Anonymous Coward

    Remove the patent issue?

    Has microsoft actually said what the patents are that are being licensed?

    or is it just "we've got 'em, so pay and pay now" ?

    The sooner that its known perhaps those bits can be "fixed" :)

    1. Anonymous Coward
      Anonymous Coward

      Re: Remove the patent issue?

      A list was revealed recently in China.

    2. h4rm0ny

      Re: Remove the patent issue?

      >>"The sooner that its known perhaps those bits can be "fixed" :)"

      All the licencing phone manufacturers obviously know what they're licencing by necessity. And Google certainly know. If it were cheaper to work around the patents than to licence them, that would definitely have happened by now.

  11. This post has been deleted by its author

    1. g e

      I'm guessing FAT/FAT32

      Is a good part of it which is perhaps why Goglephones (Nexus, etc) don't have SD Card slots meaning they can use EXT3 or whatever internally as you can't get at it physically. Likely one reason why apple don't have memory slots, too.

      Perhaps if the camera makers (and phone, too if everyone could play together) agreed with guys like Samsung and Sandisk to switch to EXT3 or something free for card filesystems going forward... dunno.

      Pretty sure MAC and Linux devices would be able to access those just fine as-is. Maybe there's something in the card hardware specs that prevents this ?

      1. Eddy Ito

        Re: I'm guessing FAT/FAT32

        Couldn't it simply be presented as a network drive via ftp, samba or the like? IIRC the file browser in all major operating systems can handle most protocols. The hard part may lie in getting it to plug and prey correctly across the board.

      2. buyone

        Re: I'm guessing FAT/FAT32

        The Moto G uses a bastard file system originated by Microsoft, as part of Google's increased security for a Multi-user phone. Yes there is a crying need for phone sharing. This file system has many limitations and got you's. Gone are the days when an Android could be USB'd and the phone would be another drive to Linux. This is the reason I had to leave Ubuntu 10.04 for 14.04 .

    2. Permidion

      the patents are not on android directly but on how to have an OS interact with a mobile device and mostly anything related to telephony

    3. Charlie Clark Silver badge

      The agreements aren't public so we can't be sure. What is known is that Microsoft has for several years been asserting its FAT32 patent on storage media. It's coming to the end of its life, not just in terms of when the patent expires but also due to the restriction in file size: once people routinely start faffing around with HD video the 4GB file limit will be a problem.

      The solution will be to use an unencumbered file system and possibly rely on something like MTP to handle this for read/write access when the device is plugged into another.

    4. d3vy

      They didnt...

      Android uses some technology that MS own patents on.. FAT/FAT32 being one.

      With the purchase of Nokia I would imagine that there will be more now.

      1. Mage Silver badge

        Purchase Nokia?

        Only the phones and a LICENCE for the IP. Nokia isn't owned by MS and still owns their IP.

        MS paid a lot and got a dying phone division (only one part of Nokia) and no IP ownership.

      2. Anonymous Coward
        Anonymous Coward

        "With the purchase of Nokia I would imagine that there will be more now."

        I guess you don't read much. MS did not buy any patents from Nokia. Nokia still owns all the IP

        1. d3vy

          "I guess you don't read much. MS did not buy any patents from Nokia. Nokia still owns all the IP"

          Fair enough, I hadn't realised that, being as it is of so little consequence to me I hadn't really spent a lot of time researching it, so I bow to your superior knowledge of Microsoft acquisitions post 2010 :)

          As a side note, I did say "I imagine that there will be more" and the fact that MS don't own the Nokia IP doesn't detract from the fact that MS still own of of the MS patents (Such as my example of fat/fat32) and thats where the "Android tax" comes from.

    5. h4rm0ny

      >>"Its probably already been published, but how did Microsoft come to own patents on android?"

      They wont be patents on Android per se. That's not really how patents work. They'll be things that were developed that Android infringed on. FAT filesystem is the popular suggestion but there's obviously more. It's been kept between the companies and MS so far.

      And this whole story isn't about the validity of the patents. If it were, Samsung would have challenged on those grounds long ago. It's Samsung attempting to exploit a possible loophole in the Nokia acquisition. Patent validity is nothing to do with this.

  12. Soruk
    WTF?

    Phone fractions...

    > Gartner estimates Samsung shipped 299,794.9 Android smartphones in 2013

    So that'd be 299,795 phones, one missing the battery cover?

  13. Anonymous Coward
    Anonymous Coward

    Humm

    "We’ve known for years that Microsoft makes more money from Google’s Android than Google does itself"

    There is multiple ways to see it. OS license sales maybe, but Google sales tablets and smartphones with a profit, not to mention the ad revenues. But as for hardware sales, we can also say that Google makes more money from their hardware operation than Microsoft will ever made :-P.

    As for the other Android makers, HTC and Sony are a strange case. HTC makes great hardware but hit by lawsuits, bad management decisions and alienating their most loyal costumers by not updating flagships models were to much. If they colaborated more with outside developers they could have done better.

    Sony...they do colaborate with external developers (freexperia, fxp) but releasing a barrage of high-end models every 6(?) months it's crazy, makes any costumer staying always in doubt when and what to buy. Why Samsung has a great success with the Notes? Software...

    Just a note: I've been thinking about how one of the android makers could get away from Google and even if I'm of the opinion that it looks almost impossible for now, Samung, with their deep pockets maybe have a chance. A partnership with a cloud player (Akamai for example), a share of that 19bn that they spend in marketing to lure developers and revamp the hog that is TouchWiz, who knows?

    1. batfastad

      Re: Humm

      On a partial note, I went into a phone franchise retail branch the other day and was amazed at how many Sony phone models were available, must have been 20+ different models on display. No wonder they're losing money hand over fist.

      1. Anonymous Coward
        Anonymous Coward

        Re: Humm

        "20+ different models on display. No wonder they're losing money hand over fist."

        That would be the same reason that Samsung is losing money hand over fist, would it?

  14. Paul Hayes 1

    I think $3.29 is a colossal amount per device. I was expecting more like $0.002 or something along those lines. It'll be far more than simsung is probably paying for any individual hardware component per device (except maybe for the screen and the battery).

    Samsung wont see anywhere near the retail price for the devices, probably not even half and that's before you consider that they had to make the thing! The distributors, resellers, service providers, retail shops etc.... will all want their cut from that price.

    1. Charlie Clark Silver badge

      I'm not convinced by the sums as it seems to ignore Samsung's other businesses which might be affected. If it's the FAT32 then their TVs are also likely to be listed then there's the PC market which, while ever decreasing in size, has usually much higher unit payments.

  15. Anonymous Coward
    Anonymous Coward

    "We’ve known for years that Microsoft makes more money from Google’s Android than Google does itself"

    I'm not sure we do and that link provided no evidence to it either. Google makes a fair bit out of their Google Services licence and a massive amount out of their secondary revenue on them. Microsoft only appeared to go after Windows Licensees and none went to a final court decision over the validity of the patents. Barnes and Noble came close to undermining the whole charade but were given an offer they couldn't refuse by Microsoft.

    I would suspect that a lot of the deals are along the lines of "for every x Android 'Licenses' you buy we'll give you x Windows Licenses". If Windows mobile had taken off then they could well have been cash neutral. If these patents were rock solid then Motorola would currently be licensing them.

  16. Buzzword

    "What we think of today as the "flagship" Android niche may shrink to boutique-sized proportions, much like top-end hi-fi or A/V equipment became a low-volume high-margin business."

    Yes, this. Mobile phone manufacturers can't differentiate on OS (it's Android or nothing, nobody except MSNokia are making WinPhones), nor can they differentiate on screens (AMOLED, 300ppi since the eye can't see the difference). There's little point adding a super-fast processor or tons of RAM since the OS and apps aren't built for it. Radio support (3G/4G/5G) depends on the network. And so on.

    Today's high-end phones compete on fringe features such as speakers (HTC One), battery life (Sony), and camera quality (Nokia). Speakers haven't evolved in years: phones differ only in speaker placement. Cameras will reach a technical plateau soon. All that's left is price. Margins will shrink dramatically: in fact they already have for most manufacturers.

    1. Adrian 4 Silver badge

      Why would they want to differentiate on OS ? PC manufacturers don't, they see the ability to run one particular OS as a major feature.

    2. Charlie Clark Silver badge

      Personally I think there's still quite a lot that Android vendors can differentiate with including: screens (I go for AMOLED, some prefer LCD), speakers, built-in memory, removable battery, SD-card support, customisation (worked great for Nokia when it was selling commodified GSM phones), waterproof, size (compact, standard, oversized), battery life, use in bright light, camera button, screen resolution, wireless charger, NFC, etc.

      If you think this is trivial just look at any other commodified market and see what works there.

  17. Permidion

    the related patents list

    in case you may be interested to know about them:

    http://images.mofcom.gov.cn/pep/201404/20140408143159274.docx

  18. Lamont Cranston
    Unhappy

    Xperia Z3 Compact

    currently sells for the better part of £400 - did you mean to reference the Xperia E3 as Sony's budget model, or am I just poor?

    1. Paul 135

      Re: Xperia Z3 Compact

      £350, though it has essentially top-end specs in a compact frame, and for that it is quite good value compared to certain other fruity competition.

      1. Lamont Cranston

        Ah, so I'm poor.

        Ho hum.

  19. Daggerchild Silver badge

    Okay, that covers *one* patent party

    So one patent lock from one company costs them $3.29 per phone. What percentage of the margin this is is unspecified, but it will be lot more significant.

    But how many other companies do they have to pay similarly undesired patentfoo for? And how many of them (whisper it softly) actually *did* anything *worth* paying for?

    I wonder what the entrance fee is for the market nowadays.

  20. Anonymous Coward
    Anonymous Coward

    I guess with Windows 8(.1) sales in the toilet, Microsoft has to make some money elsewhere.

  21. elreg subscriber
    Holmes

    Old news, really

    This is pretty old (3-4 month ago) news , including the full list of 310 asserted patents by Microsoft which many commenters seem to be oblivious of:

    See:

    http://www.zdnet.com/310-microsoft-patents-used-in-android-licensing-agreements-revealed-by-chinese-gov-7000030564/

    and

    http://arstechnica.com/tech-policy/2014/06/chinese-govt-reveals-microsofts-secret-list-of-android-killer-patents/

    As you can see from the list, almost all the patents are very generic ideas covering so much ground it is practically impossible to make a smart phone without "infringing" on some of them.

    Cheers

  22. James Pickett

    "$6.9m in interest"

    Does MS own Wonga?

  23. naive

    Light makes bugs under a tile run away

    The fact that Samsung closed this patent deal with Microsoft is understandable, it was closed in period when the lawsuit circus with Apple was peaking, and fighting a war on two fronts is seldom rewarded with victory.

    But after paying Wintel tax for over 20 years, times should have changed, it is absurd that the world still has to pay MS taxes for owning a device which allows to access web pages.

    Perhaps new legislation, which would oblige both parties to always disclose the full patent licensing agreement, would help to free the world of patent bullies and trolls. At least in this case, Microsoft would suffer severe PR implications because of this deal, and everyone would see what they have to cough up for these racketeering practices.

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