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May 1, 2013

Microsoft Generated $3.4 Billion (€2.5 Billion) per Year by Android Licensees




Microsoft has recently signed deals with two of the largest Android device manufacturers, namely Foxconn and ZTE, both of which agreed to pay the tech giant a fee for every unit they make.

It may sound a bit weird for Microsoft to pay so much attention to Android licenses, but the company has actually worked out a really ambitious plan. Analysts estimate that Redmondians could earn as much as $3.4 billion (€2.5 billion) every year by doing nothing. A report published by DigitalTrends and citing a number of unofficial forecasts point to record revenues for Microsoft thanks to its Android licensees who have no other choice than to pay royalties for the devices they develop. The whole idea is pretty simple. Microsoft currently holds several patents that cover multiple Android features, including synchronization, file storage and security, so every single device maker who embraces this free mobile operating system is forced to pay the tech giant a specific fee.

While there are no details on the paid royalties, a $1 (€0.76) fee would basically generate $430 million (€326 million) in revenues for Microsoft every single year. If the royalty goes up to $8 (€6.10) per device, the software maker could get up to $8.8 billion (€6.6 billion). Based on DigitalTrends’ estimates, Microsoft could earn approximately $8.8 billion (€6.6 billion) by 2017 thanks to the simple fact that it holds the patents covering some Android features. At this point, Microsoft’s licensees include several big names on the market, such as Samsung, LG, HTC, Acer and Barnes & Noble.

Microsoft claims that, at this point, it already signed license deals for approximately 80 percent of the devices sold in the United States, but no other figures have been provided for the global market. Still, the company expects to sign similar agreements in the near future, as it’s aiming to get royalties for nearly 95 percent of Android units shipped in the US and across the world.

Microsoft receives royalties for 80 percent of Android devices sold in the US
Image credits to cvw.com.ve

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