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Microsoft Makes an Astonishing $2 Billion Per Year From Android Patent Royalties

mrspoonsi sends this report from Business Insider: "Microsoft is generating $2 billion per year in revenue from Android patent royalties, says Nomura analyst Rick Sherlund in a new note on the company. He estimates that the Android revenue has a 95% margin, so it's pretty much all profit. This money, says Sherlund, helps Microsoft hide the fact that its mobile and Xbox groups are burning serious cash."

28 of 304 comments (clear)

  1. Gates was on the right track.. by gandhi_2 · · Score: 4, Insightful

    Hardware is cheap.
    Software is expensive.
    Charging for IDEAS, though... THAT is where the real money is.

    1. Re:Gates was on the right track.. by flargleblarg · · Score: 5, Funny

      And this is why we can't have nice things.

    2. Re:Gates was on the right track.. by sexconker · · Score: 3, Informative

      Plus, physical consoles were pretty much always loss leaders... Sega, Sony, Nintendo would lose money on their hardware and make it up on selling titles - both their own and from third-party developers. Is Microsoft not including all of profits from licensing in their reports?

      That's including all licensing fees, Live subscriptions, etc. The XBOX division as a whole is billions of dollars in the red.

    3. Re:Gates was on the right track.. by timeOday · · Score: 5, Interesting
      The benchmark is Microsoft's return on investment from their investment in Mobile, starting in the early 90's I'd guess.

      This gets to an odd contradiction right in the summary: the mobile division is "burning serious cash," yet also making $2B which is "pretty much all profit." It's as if the author sees no connection between investing in a business unit to generate intellectual property, and subsequently profiting from that investment.

    4. Re:Gates was on the right track.. by Anonymous Coward · · Score: 5, Informative

      Most of the intellectual property (basically just FAT licenses) actually came from the windows division. If you want your phone to plug into a windows machine you pay the short ugly looking character at the bridge.

    5. Re:Gates was on the right track.. by AmiMoJo · · Score: 3, Informative

      I'm surprised phone manufacturers have not abandoned FAT. Since Android 4.0 devices have appeared as MTP storage devices to computers. MTP abstracts away the underlying filesystem so they could use EXT3 or pretty much anything they wanted to.

      I suppose maybe there is a case for using FAT on SD cards, but many phones only use internal memory anyway. MTP is the only way it will ever be accessed.

      --
      const int one = 65536; (Silvermoon, Texture.cs)
      SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
    6. Re:Gates was on the right track.. by kimvette · · Score: 3, Informative

      They can't do that because Windows users will want to put the card in their PC to pull photos off.

      But, there isn't any reason a proper ext3 or ext4 driver couldn't be ported to Windows. http://www.howtoforge.com/access-linux-partitions-from-windows

      --
      The Christian Right is Neither (Christian nor right). See: Matthew 23, Matthew 25, Ezekiel 16:48-50
  2. Re:Two billion bucks... by ledow · · Score: 5, Informative

    However the test used in the patent systems worldwide tends to be along the lines:

    "to one skilled in the art".

    i.e. if it's blindingly obvious to someone who does similar work all day long, professionally, every day, then it shouldn't actually be patentable at all.

  3. Re:Two billion bucks... by girlintraining · · Score: 5, Insightful

    However the test used in the patent systems worldwide tends to be along the lines: "to one skilled in the art".

    It's the same in America. The difference is, the art isn't engineering, it's lawyering.

    --
    #fuckbeta #iamslashdot #dicemustdie
  4. Re:Two billion bucks... by stewsters · · Score: 3, Insightful

    They could just implement their own system, like Ext4 or something, the problem being that Fat and NTFS are like the only things Windows can read and write. You can get some programs that let you do it, but they are not as seamless as something like fuse is in Linux mounting windows partitions. It is a problem created by Microsoft, which apparently they have earned 2 billion for.

  5. Re:Value added? by charles2678 · · Score: 4, Interesting

    The only thing stopping Google from abandoning Microsoft's patents is that the end result would be worse than all the cheap Chinese rip-off tablets and phones.

    That's only potentially true when the patents are disclosed. It's fashionable to not disclose what the specific patents argued to be infringed actually are (or the mechanics of how they're infringed) when trying to license a portfolio.

    Can't work around a patent when you don't know what it is.

  6. Re:What about the manufacturers? Google? by Pinhedd · · Score: 3, Insightful

    Microsoft isn't patent trolling here. They would be patent trolling if they were simply holding onto broadly defined patents to use them offensively. The patents in question, which I believe relate to data storage and file systems, have been used by Microsoft for a very long time and have been challenged unsuccessfully before. Microsoft's own engineers did the work, not Google's. Google and various Android manufacturers are free to not implement them.

  7. Re:really? XBox? we sure about that? by ilguido · · Score: 4, Interesting

    Xbox is still there only because M$ has deep pockets. The original Xbox lost billions, the 360 lost a couple more billions in its first two years on the market and then never made a steady profit, they can also hide the development expenses for the Xbox in their R&D division, not to mention the expenses for the development of the Xbox OS. The Xbox would not be a viable platform for anyone else, but M$. That's a fact.

  8. common misconception. basic laws not patentable by raymorris · · Score: 4, Interesting

    > software is math

    Games are art, and are software.
    Most games are 95% art, 5% math, and 100% software.
    Math CAN be done as software, but so can art and many other non-math things. Some software is math. A LOT of software has little to do with math.

    > math isn't supposed to be patentable.

    That's a common misconception, started and encouraged by people with a particular agenda. The rule in the US is:

        The LAWS of nature, including mathematics, are not patentable.

    Note that it's the basic laws that aren't patentable. Things that USE those laws are.

    Gravity isn't patentable. An elevator is.
    Momentum isn't patentable. A brake system is.
    Division isn't patentable. eBay's feedback system is.
    Light reflection isn't patentable. The way Blender simulates reflection is, if it's novel.

    1. Re:common misconception. basic laws not patentable by Mr0bvious · · Score: 4, Insightful

      Most games are 95% art, 5% math, and 100% software.

      Huh? that's some crazy statistics?

      How much does math weigh compared to art?

      How do you measure how much math there is compared to art? Is it the byte size of the executable (minus any embedded art) vs the byte size of the art?

      I'm just confused how one could have any measure of either against each other...

      My house is 99.99% bricks and mortar and 0.01% design... (using some arbitrary measure I just thought of)

      A LOT of software has little to do with math.

      Sorry, but ALL software is an expression of math..

      --
      Never happened. True story.
  9. patent vs copyright by Chirs · · Score: 5, Interesting

    Technically it's only the implementation of an idea that is supposed to be patentable. With physical patents if you can accomplish the same thing by other means then it's fair game.

    Somehow in software they've decided to allow patenting the *idea* of momentum when scrolling via swiping, or bounceback when you hit the end.

    The equivalent to patenting physical implementations would be to allow protection of their *implementation* of an idea--and in the software world that implementation is already protected by copyright, so there's really no need for software patents.

  10. Patents - Copyright for the 21st Century by runeghost · · Score: 4, Insightful

    Patents aren't about promoting the progress of science and the useful arts, they're about a business model based on rent-extraction via arcane legal means. As alternative manufacturing options such as 3D printing mature (assuming they're not strangled by the patent titans) patents will become as obsolete and ineffective as copyright is now.

    1. Re:Patents - Copyright for the 21st Century by Opportunist · · Score: 3, Interesting

      Oh don't worry, that will be the next war. If you thought the copyright war was fierce, wait 'til companies who sell some plastic junk for big bucks because their name is printed to one side or because the part breaks easily and may only be made by the original maker get to feel the loss when people notice that for the price that part costs they could as well buy a 3D printer and be independent from them forever.

      Wait until their business model of vendor lock-in no longer works.

      There are entire companies (and I'm not talking about mom'n'pop shops) dependent on that very model of selling appliances dirt cheap and making money with the spare parts and the consumables. And printer manufacturers are the least of your concern in this matter. You're about to see the battle between people with 3D printers vs. the car industry and its associated industries.

      And this will be very, very ugly. If you thought the MAFIAA had ties in politics, wait 'til this turd hits the spinning blades. This time a LOT of jobs are on the line, and I'd be very surprised if that one goes down with a breeze. Expect some legal shit to come down that makes the whole copyright legal bull seem legit, sane and balanced.

      --
      We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
  11. Re:What about the manufacturers? Google? by Microlith · · Score: 5, Insightful

    They're trolling.

    They would be patent trolling if they were simply holding onto broadly defined patents to use them offensively.

    So they're indirect patent trolls via Intellectual Ventures and Rockstar?

    Google and various Android manufacturers are free to not implement them.

    Not as long as Microsoft filesystems are the de-facto file systems for SD cards by virtue of their desktop monopoly.

  12. Re:They finally made money out of Linux. by melikamp · · Score: 5, Insightful

    Funny.

    But seriously, open your fucking eyes, people. Here we have a private enterprise that put a break on the development of a personal computer for 20 something years, and now it's taxing the development and adoption of an operating system that was written from scratch, using UNIX philosophy which Micro$oft neither invented nor indeed implemented.

    Just like copyrights, patents are not worth crap to individual inventors because the chances of making a return on the investment with one, two, or even a hundred inventions are miniscule. So the inventors sign over their inventions to capitalists for either a small lump sum or a regular paycheck; and so do the artist with copyright, because it ultimately makes sense for them economically. The capitalists, on the other hand, are wielding tens of thousands of patents; just like the art producers are controlling significant proportions of the entire catalog. And when they control, say, 10% of all published ideas, they can finally make patents (and copyrights) pay. The art business is ugly, we all heard that, but the technology is uglier! With patents, in particular, the best way to maximize the return is by suing everyone who dares to innovate. The point being, everyone has to keep using the same shit invented 20 or 40 years ago, and pay, pay, and pay again to some bastard who neither invented nor encouraged invention [1], but simply invested into exclusive rights. This was true for the steam engine, and it is true for the latest, smallest, sexiest computers of tomorrow.

    [1] Don't believe me? Look it up. Multiple studies were conducted, and no correlation was found between patent law strength on one hand and the rate of innovation on the other.

  13. Re:really? XBox? we sure about that? by PPH · · Score: 4, Funny

    its got netflix support

    What doesn't? I think my hedge clippers have Netflix..

    --
    Have gnu, will travel.
  14. Re:really? XBox? we sure about that? by decipher_saint · · Score: 3, Funny

    What doesn't? I think my hedge clippers have Netflix..

    Does it work without a Hedge Clippers Live Gold subscription?

    --
    crazy dynamite monkey
  15. Re:Two billion bucks... by whoever57 · · Score: 5, Interesting

    I have never understood this. Windows users are used to installing drivers for each new piece of hardware. Why not bundle an ext4 driver? The device could even have a small FAT partiton (without the patented parts of FAT) that contains the driver for the larger ext4 partition.

    Manufacturers have allowed the situation to exist.

    --
    The real "Libtards" are the Libertarians!
  16. Re:really? XBox? we sure about that? by Fjandr · · Score: 3, Informative

    It only has NetFlix support if you pay MS monthly. It's free on every other platform.

  17. Re:They finally made money out of Linux. by melikamp · · Score: 4, Informative

    I am not even going to argue with you about "innovations in computing", what with the best OS to date written by a Finn. How about this instead:

    Empirically, the nation with the strongest army is also the nation that is responsible for most of the innovations in computing.

    Empirically, the nation with the largest inmate population (both absolute and relative to population size) is also the nation that is responsible for most of the innovations in computing.

    Empirically, the nation with the highest healthcare costs (both absolute and relative to GDP) is also the nation that is responsible for most of the innovations in computing.

  18. The law needs to change by jonwil · · Score: 4, Insightful

    It should be ILLEGAL for any company to make statements like "xyz is violating our patents" unless that statement contains details of which patents are being violated and which products/features/etc are doing the violating.

    If Microsoft is forced to reveal in public which patents are being violated and how, it would allow the Linux community to evaluate that information and find prior art where it exists or find ways to make linux not violate the patent (e.g. kernel option to disable the relavent code or rewrite the code to not violate) and generally make it harder for MS)

    Remember the TomTom case, evidence came out about a specific FAT patent related to long file names and TomTom just disabled that feature (since they didn't actually need it)

  19. Re:Two billion bucks... by DarwinSurvivor · · Score: 3, Interesting

    For some reason filesystem drivers (be they physical, usb, network, etc) appear to be VERY hard to write for windows. I have yet to see a 3rd party filesystem driver for windows that wasn't either broken or unstable. This includes NFS, EXT, even encrypted volumes. The best we've been able to get in most cases is a 3rd party file manager that can read/write the partitions, almost none of them work with the default file browser.

  20. Because it isn't April 2014 yet by tepples · · Score: 3, Insightful

    A better question is, why not just use UDF? Windows supports it for both reading and writing, beginning with Vista (XP supported it read-only).

    Because it isn't April 2014 yet, and Windows XP still supports it only read-only.